The OPEC Reference Basket averaged $59.46/b in December, following a decline of $16.11 or 21%. In annual terms, the Basket averaged $96.29/b in 2014, representing a decline of $9.58 from the previous year. ICE Brent in December plunged $16.36 to stand at $63.27/b, averaging $99.45/b for the year. Nymex WTI lost $16.52 to stand at $59.29/b in December, for a yearly value of $92.97/b. The Brent-WTI spread stood at $3.98/b.
World economic growth for 2014 and 2015 remains unchanged from the previous month at 3.2% and 3.6%, respectively. The OECD growth estimate is unchanged at 1.8% for 2014, but the 2015 forecast has been revised to 2.2% from 2.1%. The forecasts for China and India remain unchanged at 7.2% and 5.8% in 2015, respectively.
World Oil Demand
Global oil demand is estimated to have grown by 0.95 mb/d in 2014, representing an upward revision of 20 tb/d from the previous month. The adjustment mainly reflects better-than-expected oil demand data from OECD America and China. In 2015, world oil demand is anticipated to rise by 1.15 mb/d, following an upward revision of 30 tb/d due to expectations of higher oil requirements in OECD America and Other Asia.
World Oil Supply
Non-OPEC oil supply is estimated to have grown by 1.98 mb/d in 2014, following an upward revision of 260 tb/d from the previous report, driven by higher than expected growth seen at the end of the year. In 2015, non-OPEC oil supply is projected to grow by 1.28 mb/d, representing a downward revision of 80 tb/d from the previous report. OPEC NGLs and non-conventional liquids are expected to average 6.03 mb/d in 2015, up from 5.83 mb/d in 2014. In December, OPEC crude oil production averaged 30.20 mb/d, according to secondary sources, an increase of 0.14 mb/d over the previous month.
Product Markets and Refining Operations
Product markets in the Atlantic Basin weakened in December as margins were affected by the drop in the gasoline and middle distillates cracks amid an oversupply of gasoline in the region. The Asian market experienced only a slight drop as increased distillate supplies were offset by winter seasonal demand and the positive performance at the top and bottom of the barrel.
Freight rates for dirty tankers saw mixed movements in December. VLCCs continued to realise the gains seen since the beginning of 4Q14, increasing by 16% from the month before. The improvements seen in VLCC freight rates came as a result of an active market and high Asian tonnage demand. Both Suezmax and Aframax saw a negative performance, declining by 9% and 29%, respectively, on average from a month earlier. OPEC spot fixtures dropped by 9.2% from the previous month to average 11.63 mb/d.
OECD commercial oil stocks fell in November by around 10 mb to stand at 2,710 mb. At this level, inventories were 20.3 mb higher than the last five-year average. Crude indicated a surplus of 38.2 mb, while product stocks remained 17.9 mb below the five-year average. In terms of days of forward cover, OECD commercial stocks stood at 58.7 days, one day above the five-year average.
Balance of Supply and Demand
Demand for OPEC crude is estimated at 29.1 mb/d in 2014, representing a revision of 0.2 mb/d from the last report. In 2015, required OPEC crude is projected at 28.8 mb/d, following a downward adjustment of 0.1 mb/d.