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BMI Global Oil Market Report Q310: Is the Price Right'
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BMI Global Oil Market Report Q310: Is the Price Right'

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A harsh winter has turned into a benign spring with little obvious change in oil market sentiment. The big bucks are still backing a significant economic recovery and much higher oil ...

A harsh winter has turned into a benign spring with little obvious change in oil market sentiment. The big bucks are still backing a significant economic recovery and much higher oil demand'particularly in the non- OECD world. Speculative activity is at a high level, in spite of threats to boost regulation. Gasoline is already looking to be a strong market in 2010, even though we are several weeks away from receiving representative demand data. Demand projections for 2010 continued to firm up during the opening quarter, even though the jury is still out regarding the strength and sustainability of the economic recovery. Stormy weather early in the year has done little to disturb the calm of oil markets, where prices have made steady progress. Even inventories, which have represented the Achilles' heel of the oil market for some time, are perceived to be less of a threat thanks to increased demand and ongoing OPEC production restraint. Having been propped up by weather factors in late 2009, oil prices looked set for a rough ride in early 2010 as the first phase of the cold winter seemed to fade. Weekly OPEC average prices tumbled from more than US$78 per barrel (bbl) as the year began to not much more than US$70/bbl in the middle of February. Oil market bears came out of hibernation early and proclaimed that the bull-run was over. More snow then fell, the bears ducked for cover and crude rallied to almost US$78/bbl by mid-March. The price made further gains to break above US$80/bbl in early April and has been finding good support in spite of bearish US inventory data. The improvement seen in the Q1 global inventory position was modest and, given recent stock trends, it is clear that over-supply here is a major threat to price stability. According to the International Energy Agency (IEA)'s April 2010 monthly Oil Market Report (OMR), OECD end-February commercial oil inventories stood at 2,685mn bbl, down 38.4mn bbl from January levels. Over the past five years, February stocks have been drawn down by an average of 25.5mn bbl. Total refined products stocks declined by 26.5mn bbl, however, against the 'usual' fall of 32.6mn bbl. This means that good progress was made by crude as stocks fell at a time when they generally rise. Products, however, took a different path, meaning that there is little cause for celebration. Indeed, the March data gathered by the IEA point to an increase in OECD inventories of some 8mn bbl during a month that typically sees a fall of 12.5mn bbl. Small changes to small numbers imply that little is happening to improve the underlying position. March crude oil stocks rose by 24.1mn bbl, beating the normal monthly increase, but product inventories decreased by 16mn bbl'falling short of the traditional March monthly draw. Short-term crude floating storage rose to 65mn bbl, but products floating storage moved from 74mn bbl at the end of February to an estimated 52mn bbl. These mixed signals tell us relatively little about the health of the market. In terms of production, the worrying OPEC output trend was reversed in March, but not as a result of the cartel's efforts to achieve better market balance. So far in 2010, it has been a story of ignored quotas and rising volumes. The March ministerial meeting again left the production ceiling unchanged but there was little evidence of a determination to bring actual output closer to the agreed level. Overall OPEC production, including Iraq, averaged 29.04mn b/d in January and 29.17mn b/d in February. It declined to slightly under 29mn b/d in March as Iraqi shipments were reduced. The core 11 members actually increased their supply to 26.73mn b/d, compared with 26.62mn b/d in January. Repeated calls by ministerial meetings to improve discipline have fallen on deaf ears. OPEC seems to have given up trying and will now hope that excesses in certain quarters will be countered by unplanned shortfalls elsewhere. OPEC compliance with output targets stood at about 55% in Marc

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BMI Global Oil Market Report Q310: Is the Price Right' BMI Global Oil Market Report Q310: Is the Price Right' Document Transcript

  • Find Industry reports, Company profilesReportLinker and Market Statistics >> Get this Report Now by email!BMI Global Oil Market Report Q310: Is the Price RightPublished on May 2010 Report SummaryA harsh winter has turned into a benign spring with little obvious change in oil market sentiment. The big bucks are still backing asignificant economic recovery and much higher oil demandparticularly in the non- OECD world. Speculative activity is at a high level,in spite of threats to boost regulation. Gasoline is already looking to be a strong market in 2010, even though we are several weeksaway from receiving representative demand data.Demand projections for 2010 continued to firm up during the opening quarter, even though the jury is still out regarding the strengthand sustainability of the economic recovery. Stormy weather early in the year has done little to disturb the calm of oil markets, whereprices have made steady progress. Even inventories, which have represented the Achilles heel of the oil market for some time, areperceived to be less of a threat thanks to increased demand and ongoing OPEC production restraint.Having been propped up by weather factors in late 2009, oil prices looked set for a rough ride in early 2010 as the first phase of thecold winter seemed to fade. Weekly OPEC average prices tumbled from more than US$78 per barrel (bbl) as the year began to notmuch more than US$70/bbl in the middle of February. Oil market bears came out of hibernation early and proclaimed that the bull-runwas over. More snow then fell, the bears ducked for cover and crude rallied to almost US$78/bbl by mid-March. The price madefurther gains to break above US$80/bbl in early April and has been finding good support in spite of bearish US inventory data.The improvement seen in the Q1 global inventory position was modest and, given recent stock trends, it is clear that over-supply hereis a major threat to price stability. According to the International Energy Agency (IEA)s April 2010 monthly Oil Market Report (OMR),OECD end-February commercial oil inventories stood at 2,685mn bbl, down 38.4mn bbl from January levels. Over the past five years,February stocks have been drawn down by an average of 25.5mn bbl. Total refined products stocks declined by 26.5mn bbl, however,against the usual fall of 32.6mn bbl. This means that good progress was made by crude as stocks fell at a time when they generallyrise. Products, however, took a different path, meaning that there is little cause for celebration.Indeed, the March data gathered by the IEA point to an increase in OECD inventories of some 8mn bbl during a month that typicallysees a fall of 12.5mn bbl. Small changes to small numbers imply that little is happening to improve the underlying position. Marchcrude oil stocks rose by 24.1mn bbl, beating the normal monthly increase, but product inventories decreased by 16mn bblfalling shortof the traditional March monthly draw. Short-term crude floating storage rose to 65mn bbl, but products floating storage moved from74mn bbl at the end of February to an estimated 52mn bbl. These mixed signals tell us relatively little about the health of the market.In terms of production, the worrying OPEC output trend was reversed in March, but not as a result of the cartels efforts to achievebetter market balance. So far in 2010, it has been a story of ignored quotas and rising volumes. The March ministerial meeting againleft the production ceiling unchanged but there was little evidence of a determination to bring actual output closer to the agreed level.Overall OPEC production, including Iraq, averaged 29.04mn b/d in January and 29.17mn b/d in February. It declined to slightly under29mn b/d in March as Iraqi shipments were reduced. The core 11 members actually increased their supply to 26.73mn b/d, comparedwith 26.62mn b/d in January. Repeated calls by ministerial meetings to improve discipline have fallen on deaf ears. OPEC seems tohave given up trying and will now hope that excesses in certain quarters will be countered by unplanned shortfalls elsewhere.OPEC compliance with output targets stood at about 55% in March, compared with 56% the previous month and down dramaticallyfrom the 83% seen in March 2009. As ever, a severe price shock is needed to concentrate the minds of OPEC members. The March2009 OPEC basket price was just US$45.78/bbl, or some 41% below the level seen in March 2010. At present, the UAE, SaudiArabia and Kuwait are closest to their production targets, while Angola, Nigeria and Iran have moved further above their theoreticaloutput ceilings.Non-OPEC supply in Q1 has been fairly stable, rising from January to February and then levelling out. March 2010 output averagedaround 52.5mn b/d, more or less unchanged from the February level. Average Q110 non- OPEC supply is put at around 52.3mn b/d,compared with 51.3mn b/d a year earlier. North America, the former Soviet Union (FSU), Latin America and China have all madepositive progress.BMI Global Oil Market Report Q310: Is the Price Right Page 1/4
  • Find Industry reports, Company profilesReportLinker and Market Statistics Table of ContentGlobal Oil Market Review Q110 . 5Riding Out The Calm ................5Quarterly Trends .. 6OPEC Losing Control .. 6Global Oil Market Outlook Q210 8Is The Price Right ....................8Oil Price Forecasts ........ 8Oil Supply, Demand And Price Outlook Q210 10Short-Term Demand Outlook .10Table: Global Oil Consumption (000b/d) ......10indicators: Africa, Middle East, NW Europe, N America, Asia/Pa cific, Central/Eastern Europe,Latin America, Total, OECD, Non-OECD, Demand growth %, OECD %, Non-OECD %Short-Term Supply Outlook ................11Table: Global Oil Production (000b/d) .........11indicators: Africa, Middle East, NW Europe, N America, Asia/Pa cific, Central/Eastern Europe,Latin America, OPEC NGL adjustment, Processing gains, Total, OPEC, OPEC inc NGLs, Non-OPEC,Supply growth %, OPEC %, Non-OPEC %Longer-Term Supply And Demand .... 12Table: Crude Price Assumptions 2010 ..........12indicators: Brent (US$/bbl), WTI (US$/bbl), OPEC basket (US$/bbl), Dubai (US$/bbl)Oil Price Assumptions .. 12Table: Oil Price Forecasts ..12indicators: Brent (US$/bbl), UralsMed (US$/bbl), WTI (US$/bbl), OPEC basket (US$/bbl)Dubai (US$/bbl)Global Oil Products Market Review Q110 ...... 14Off Road: Gasoline/Diesel Trends .............14Wheel Spin ........ 14Plane Talking: Jet Fuel Trends .......... 16Driving Slowly ......... 19Global Oil Products Price Outlook Q210 .19Table: Oil Product Price Assumptions, Q409-Q410 (US$/bbl) .........19indicators: gasoline - NY Harbour Unleaded, Singapore Premium Unleaded, Global Average,jet/kerosene - Rotterdam, NY Harbour, Singapore, Global Average gasoil - Rotterdam,Mediterranean, Singapore, Global AverageRevised Forecasts ....... 20Table: Oil Product Price Data And Forecasts, 2007-2014 (US$/bbl) ..................20indicators: gasoline - Rotterdam Premium Unleaded, NY Harbour Unleaded, SingaporePremium Unleaded, Global Average, jet/kerosene - Rotterdam, NY Harbour, Singapore,Global Average gasoil - Rotterdam, Mediterranean, Singapore, Global AverageBMI Global Oil Market Report Q310: Is the Price Right Page 2/4
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  • Find Industry reports, Company profilesReportLinker and Market Statistics Payment Information Please indicate the payment method, you would like to use by selecting the appropriate box. Payment by credit card Card Number: ______________________________________________ Expiry Date __________ / _________ CVV Number _____________________ Card Type (ex: Visa, Amex…) _________________________________ Payment by wire transfer Crédit Mutuel RIB : 10278 07314 00020257701 89 BIC : CMCIFR2A IBAN : FR76 1027 8073 1400 0202 5770 189 Payment by check UBIQUICK SAS 16 rue Grenette – 69002 LYON, FRANCE Customer signature:   Please note that by ordering from Reportlinker you are agreeing to our Terms and Conditions at http://www.reportlinker.com/index/terms Please fax this form to: Europe, Middle East and Africa : + 33 4 37 37 15 56 Asia, Oceania and America : + 1 (805) 617 17 93BMI Global Oil Market Report Q310: Is the Price Right Page 4/4