The Middle East”;s oil demand is expected to grow by 63tb/d(thousand barrels per day) for 2016 and projected to increase by 0.18 mb/d in 2017, Opec monthly report released yesterday noted.
Oil demand growth in Saudi Arabia registered positive growth in August after four consecutive months of declines and only for the third time in 2016. Oil demand growth increased by around 64 tb/d, or 2.2 percent, y-o-y to stand at 2.93 mb/d.
All products had positive growth, with the exception of direct crude burning and diesel oil, which shrank by around 12.8 percent and 1.9 percent y-o-y, respectively. In contrast, jet/kerosene, fuel oil and LPG increased by 33.0 percent, 35.5 percent and 22.9 percent y-o-y, respectively. Growth in the transportation sector was supported by the summer holidays, especially in the aviation sector.
The Opec Reference Basket (ORB) slipped slightly in September to 42.89/b, down 21¢. ICE Brent ended up 8¢ at 47.24/b and NYMEX WTI increased 43¢ to 45.23/b. Crude oil prices were supported by efforts to address excess global supplies and consecutive draws in US crude stockpiles. The Brent-WTI spread narrowed to 2.01/b.
Despite the small improvement in all crude oil benchmarks and price differentials for most ght sweet crudes, the ORB ended September slightly lower on average.
The reduction in the Official Selling Price (OSP) monthly offsets for key Middle East Gulf crudes loading in September and destined largely to Asia, was the main contributor to this counterintuitive performance of the ORB over the month. As the percentage share of the OSP”;s offsets in the overall ORB value became weighty, large changes in these offsets began to affect the monthly performance of the ORB notably.
Nevertheless, the end-of-the-month rally in the oil complex after Opec struck a deal to limit crude output, helped in limiting the ORB losses, although price volatility was significant during the entire month. Meanwhile, for the second quarter in a row, the ORB edged higher in 3Q16, ending up more than 40 percnet from the record-low 1Q16.
For 2017, oil demand growth is anticipated to be at the same levels as highlighted in previous month”;s report as economic activities gain further momentum.
Demand is foreseen to be led by Saudi Arabia with transportation fuels, petrochemical feedstocks as well as crude oil for direct use projected to contribute to product growth. In contrast, geopolitical concerns are expected to have a negative impact on oil consumption in certain regions.
Source: MENAFnPrevious Next
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