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Crude Oil Price Trends and Global Energy Outlook

by Krystal

Crude Oil Price Movements

In the month of November, the OPEC Reference Basket (ORB) witnessed a decline of $6.86, equivalent to 7.5% month-on-month (m-o-m), averaging $84.92/b. The dip in oil futures prices, marked by increased volatility, was evident as the ICE Brent front-month contract dropped by $6.67 (7.5%, m-o-m) to $82.03/b, and the NYMEX WTI front-month contract recorded a $8.09 decrease (9.5%) to average $77.38/b. Simultaneously, the DME Oman front-month contract experienced a $6.25 drop (7.0%, m-o-m) to settle at $83.06/b. Throughout November, the ICE Brent/NYMEX WTI spread widened by $1.42 to average $4.65/b. The market structure weakened as the front end of the ICE Brent and DME Oman futures forward curves flattened, while NYMEX WTI timespreads shifted into contango. Notably, hedge funds and money managers significantly reduced bullish positions during the month, contributing to heightened price volatility and applying downward pressure on futures prices.

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World Economy

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The global economic growth forecast for 2023 sees a slight upward revision to 2.9%, while 2024 remains unchanged at 2.6%. The U.S. economic growth projection is adjusted to 2.4% for 2023 and 1.0% for 2024, with the Eurozone maintaining a growth rate of 0.2% for 2023 and 0.5% for 2024. Japan’s economic growth is revised down to 1.7% for 2023 and 0.9% for 2024, while China’s forecast remains steady at 5.2% for 2023 and 4.8% for 2024. India’s growth forecast is revised upward to 6.5% for 2023, with 2024 remaining unchanged at 5.9%. Brazil and Russia maintain their economic growth projections at 2.5% (2023) and 1.2% (2024) and 2.2% (2023) and 1.3% (2024) respectively.

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World Oil Demand and Supply

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The world oil demand growth forecast for 2023 remains steady at 2.5 mb/d, with offsetting adjustments in OECD and non-OECD regions. In 2024, world oil demand is projected to grow by 2.2 mb/d. Non-OPEC liquids supply growth stands at 1.8 mb/d for 2023 and is expected to expand by 1.4 mb/d in 2024. OPEC NGLs and non-conventional liquids are forecast to grow to 5.5 mb/d by 2024. OPEC-13 crude oil production in November dropped by 57 tb/d to average 27.84 mb/d.

Product Markets and Refining Operations

Refinery margins in the US Gulf Coast (USGC) decreased in November, with losses across the barrel except for gasoil. US gasoline crack spreads continued to drop seasonally, impacting USGC refining economics. Margins in Rotterdam and Singapore remained under pressure but saw slight improvements month-on-month. Global refinery intakes rose by 1.7 mb/d in November to average 80.2 mb/d, with a year-on-year increase of 817 tb/d. Refinery intakes are expected to be supported in the coming months, although weakening margins may limit the upside.

Tanker Market

Dirty freight rates recovered in November, with VLCC spot freight rates seeing healthy gains, particularly on the Middle East-to-East route. Suezmax and Aframax rates also experienced increases, albeit more measured. Clean rates exhibited mixed movement, with East of Suez rates falling and West of Suez rates rising.

Crude and Refined Products Trade

Preliminary data for November shows stable US crude imports at 6.3 mb/d, while crude exports increased to 4.8 mb/d, the highest since March 2022. China’s crude imports recovered, averaging 11.6 mb/d in October. India’s crude imports increased in October, and product imports were the second-highest on record. Japan’s crude imports declined in October, and OECD Europe saw a slight increase in crude and product imports.

Commercial Stock Movements

Preliminary data for October 2023 indicates a 12.8 mb month-on-month decrease in total OECD commercial oil stocks, standing at 2,818 mb, which is 128 mb below the 2015–2019 average. Crude stocks rose by 11 mb, m-o-m, while product stocks fell by 23.8 mb, m-o-m. OECD commercial crude stocks stood at 1,342 mb in October, 112 mb lower than the 2015–2019 average. Total product stocks stood at 1,476 mb, 16 mb below the 2015–2019 average.

Balance of Supply and Demand

Demand for OPEC crude in 2023 remains at 29.1 mb/d, 0.6 mb/d higher than in 2022. In 2024, demand for OPEC crude is projected to be 29.9 mb/d, an increase of 0.8 mb/d from 2023.

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