The World economic growth has been revised down to 3.2per cent for 2016 as a result of slow growth in many nations. The Organisation of Petroleum Exporting Countries, OPEC indicated in its latest report that OECD growth in 2016 has been revised lower to 2.0per cent, the same pace as in the previous year. It maintained that in the emerging economies, China’s growth in 2016 has been revised down slightly to 6.3per cent while India’s growth has been revised lower to 7.5per cent. The report disclosed that meanwhile; increasing difficulties in both Brazil and Russia are seen pushing both economies into recession for the second consecutive year.
It maintained that world oil demand growth in 2015 is expected to increase by 1.54 mb/d, unchanged from the previous report, to average 92.96 mb/d. The report disclosed that in 2016, world oil demand is expected to grow by 1.25 mb/d, representing a marginal lower adjustment of 10 tb/d from the previous forecast, to average 94.21 mb/d. It maintained that Non-OECD countries will continue to contribute the bulk of oil demand growth this year. The report has it that Non-OPEC oil supply growth in 2015 has been revised up by 90 tb/d to 1.32 mb/d, mostly driven by higher-than-expected fourth quarter data.
It maintained that in 2016, non-OPEC oil supply is projected to decline by 0.70 mb/d, following a downward revision of 40 tb/d, mainly due to announced capex cuts by international oil companies, the fall in active drilling rigs in the US and Canada, and a heavy annual decline in older fields. The report maintained that OPEC NGL production is expected to grow by 0.17 mb/d in 2016, up from 0.15 mb/d last year. It disclosed that in January, OPEC crude production increased by 131 tb/d to average 32.33 mb/d, according to secondary sources.
The report maintained that US refinery margins remained weak, weighed down by the poor performance of the middle distillate market, despite a temporary boost in heating fuel demand from snow storms on the US East Coast. It indicated that in Europe and Asia, refinery margins edged higher on the recovery seen at the bottom of the barrel due to stronger regional demand. “Dirty tanker fright rates rose on average in January, supported by higher Suezmax rates on the back of strong tonnage demand and delays in the Turkish straits. Both VLCC and Aframax rates, however, saw declines.
In the clean tanker market, freight rates showed significant gains over the previous month, both East and West of Suez, on the back of steady demand.” “OECD commercial oil stocks fell in December to stand at 2,974 mb. At this level, inventories are around 310 mb higher than the latest five-year average. Crude and products showed surpluses of about 249 mb and 61 mb, respectively. In terms of forward cover, OECD commercial stocks stood at 63.7 days in December, unchanged from the previous month and some 6.1 days higher than the latest five-year average,” it added