OPEC increased production by 810,000 barrels per day in March, according to the Monthly Oil Market Report (MOMR)
The OPEC Monthly Oil Market Report covers major issues affecting the world oil market and provides an outlook for crude oil market developments for the coming year.
OPEC crude oil production
According to secondary sources, total OPEC crude oil production averaged 30.79 mb/d in March, an increase of 0.81 mb/d over the previous month. Crude oil output increased mostly from Saudi Arabia and Iraq, while Libya saw a return of about 165 tb/d from shut-in wells in active oil fields. According to secondary sources, OPEC crude oil production, not including Iraq, stood at 27.16 mb/d in March, down by 0.49 mb/d over the previous month.
Oil market highlights
Crude Oil Price Movements
The OPEC Reference Basket retreated in March by $1.60 to $52.46/b as the market refocused on the oversupply situation as demand remained subdued. ICE Brent and Nymex WTI futures contracts also fell $1.86 and $2.87 to average $56.94/b and $47.85/b, respectively, for the month. The Brent-WTI spread widened to around $9/b.
World economic growth for 2015 is forecast at 3.4%, unchanged from the previous report.
The OECD growth estimate for the year also remains the same at 2.2%. US growth in 2015 remains unchanged at 2.9%, while better-than-expected growth in the Euro-zone has resulted in an upwardly revised forecast of 1.3%. In contrast, Japan’s growth has been revised lower to 0.8%. China’s growth forecast remains unchanged at 7.0% in 2015. India is forecast to see growth of 7.5% for the year. The most recent softening trend in the US
and some major emerging markets will need to be carefully monitored.
World Oil Demand
World oil demand growth in 2014 was revised down marginally to 0.95 mb/d. For 2015, oil demand growth is anticipated to be around 1.17 mb/d, unchanged from the previous MOMR. Almost two thirds of 2015 oil demand growth is seen coming from China, Other Asia and the Middle East.
World Oil Supply
Non-OPEC oil supply growth in 2014 now stands at 2.17 mb/d, following an upward revision of 0.13 mb/d since the previous report. In 2015, non-OPEC oil supply is now projected to grow by 0.68 mb/d, following a downward revision of 165 tb/d compared to the previous assessment. US tight oil and Canadian oil sands output are expected to see lower growth following the recent strong declines in rig counts. OPEC NGLs are expected to grow by 0.19 mb/d in 2015, following growth of 0.18 mb/d last year. In March, OPEC crude production increased by 0.81 mb/d to average 30.79 mb/d, according to secondary sources.
Oil prices, US dollar and inflation
The volatile trends in the currency markets, in combination with a rising US dollar,continue. This trend remains largely influenced by the monetary decisions of various central banks but is also impacted by some real economic and political developments.
With the quantitative easing measures of the ECB, a continued expansionary policy in Japan, the potential of monetary tightening in the US and monetary decisions targeting growth in major emerging economies, the volatility in currency markets should be expected to continue. This is even more likely as the latest softening in the US could probably delay the decision to raise the interest rate, while a faster-than-expected recovering Euro-zone could force the ECB to reconsider its latest monetary decisions.
In terms of numbers, the US dollar continued strengthening on average in March against all major currencies. It gained 4.5% compared to the euro, 1.5% versus the yen, it rose 2.3% versus the pound sterling and 4.7% compared to the Swiss franc.
While on average the exchange rate to the euro stood at $1.1346/€ in February, it reached around $1.0834/€ in March. The Russian ruble halted its considerable decline as it rose by 6.5% m-o-m in March and continued rising at the beginning of April. The Brazilian real continued depreciating versus the US dollar by 11.5% m-o-m on average in March, after a decline of 6.9% in February.
In nominal terms, the price of the OPEC Reference Basket (ORB) fell by a monthly average of $1.6/b, or 3%, from $54.06/b in February to $52.46/b in March. In real terms, after accounting for inflation and currency fluctuations, the ORB fell by 0.2%, or $0.06/b, to $36.39/b from $36.44/b (base June 2001=100). Over the same period, the US dollar gained 2.8% against the import-weighted modified Geneva I + US dollar basket*, while inflation remained flat.
Oil production from non-OPEC producers in Africa is expected to decline by 10 tb/d to average 2.41 mb/d. This indicates a downward revision by 10 tb/d compared with the last monthly report. Some growth is forecast in Congo as well as Equatorial Guinea at 10 tb/d each.
Read Full Report: OPEC Monthly Oil Market Report – April 2015