The OPEC Reference Basket (ORB) declined in March by $3.43, or 4.2%, m-o-m to average $78.45/b. The ICE Brent first-month contract fell by $4.33, or 5.2%, m-o-m to $79.21/b, while the NYMEX WTI first-month contract fell by $3.49, or 4.5%, m-o-m to average $73.37/b. The DME Oman first-month contract fell by $3.63, or 4.4%, m-o-m to settle at $78.34/b. The front-month ICE Brent/NYMEX WTI spread narrowed in March by 84¢ m-o-m to average $5.84/b. The futures forward curves of ICE Brent and DME Oman flattened slightly in March, but remained in backwardation. However, the NYMEX WTI price structure remained in contango, although the nearest time spread contracted m-o-m. Hedge funds and other money managers heavily cut bullish positions in ICE Brent and NYMEX WTI last month. Last month, hedge funds and other money managers significantly reduced their bullish positions in ICE Brent and NYMEX WTI.

 

Global Economy

Given better-than-expected economic performance in 2H22 in a number of significant economies, the prediction for global economic growth in 2022 has been revised up slightly to 3.3%. Forecasted global economic growth for 2023 stays at 2.6%. The economic growth predictions for the US remain at 2.1% for 2022 and 1.2% for 2023. Similar to this, the prediction for economic growth in the Eurozone is still 3.5% for 2022 and 0.8% for 2023. Japan's economic growth is expected to expand by 1% in 2022 and by 1% instead of 1.2% in 2023. Forecasts for China's economic growth for 2022 and 2023 remain around 3% and 5.2%, respectively. India's economic growth is expected to expand by 6.7% in 2022 and by 5.6% in 2023. The projected rates of economic growth for Brazil for 2022 and 2023 are also maintained at 2.9% and 1%, respectively. The projected contraction for Russia is fixed at 2.1% in 2022 and is anticipated to be followed by a lesser contraction of 0.5% in 2023. The global economy will continue to navigate through issues such as rising inflation, increased interest rates, particularly in the Euro-zone and the US, and high debt levels in many regions, even though some growth momentum from 2H22 is projected to carry over into 1H23.

 

Global demand for oil

The projection for 2022 global oil demand growth is still 2.5 mb/d, essentially unchanged from the projection made last month. It remains at 2.3 mb/d until 2023, the same as it was last month. Minor downward modifications have been made to reflect the most recent changes in the OECD region, particularly in the OECD Americas and OECD Europe. However, some higher modifications were necessary due to the stronger-than-anticipated demand seen in non-OECD in January and February. In 2023, the OECD expects oil demand to rise by 0.1 mb/d, while non-OECD countries expect it to rise by 2.2 mb/d.

Global Oil Production

The forecast for the rise of the non-OPEC liquids supply in 2022 is still 1.9 mb/d, which is essentially unchanged from the projection from the previous month. The United States, Russia, Canada, Guyana, China, and Brazil were the main forces behind the growth of the liquids supply in 2022, while Norway and Thailand saw the biggest declines. Non-OPEC liquids supply growth is anticipated to increase by 1.4 mb/d in 2023, roughly maintaining last month's prediction. The US, Brazil, Norway, Canada, Kazakhstan, and Guyana are anticipated to be the primary growing regions for the liquids supply, while Russia is anticipated to be the main decliner. There are still a lot of questions about how the output outlook for US shale in 2023 will affect things. The average amount of OPEC NGLs and unconventional liquids is expected to increase by 0.1 mb/d in 2022 and by 50 tb/d in 2023. According to secondary sources that are available, OPEC-13 crude oil production decreased by 86 tb/d month-over-month to average 28.80 mb/d in March.

Product Merchandising and Refining Activities

Refinery margins suffered significant losses the previous month, but only made a little amount of progress in March. Product inventories came under strain during the course of the month, which supported the development of product cracks. This was caused by a contraction in product balances in the Atlantic Basin brought on by the start of intensive refinery maintenance and a decrease in product output in France as a result of a statewide energy workers strike. Stronger refinery margins were also a result of falling feedstock prices in all major geographic areas. According to early estimates, global refinery processing rates decreased by about 259 tb/d in March. Refinery intakes are anticipated to continue being constrained by robust offline capacity, which is anticipated to peak in the upcoming month.

Market for tanks

With month-over-month increases on the majority of the tracked routes, dirty spot freight prices continued to rise in March. The Middle East to East route witnessed the biggest gain for VLCCs, climbing by 45% as increased Chinese purchasing pushed up rates. On the US Gulf to Europe route, Suezmax spot freight rates remained high and were up 20% month over month. Spot freight rates on the intra-Med route increased 23% month over month as Aframax rates recovered from the previous month's fall. West of Suez spot freight rates for clean tankers were at 29%, helped by the Mediterranean's robust performance. Rates east of Suez decreased 10% on average month over month as Far Eastern demand for winter goods decreased.

Crude and Refined Products Trade

According to preliminary data, US product exports recovered to average 6.3 mb/d in March, while US oil exports reached a new record high of 4.8 mb/d. China's crude imports in February averaged about 10.7 mb/d, somewhat recovering from the fall at the beginning of the year. China's exports of goods increased as well, at a healthy 1.7 mb/d. With an average of just under 5.0 mb/d in February, India's crude imports were at their highest level in more than ten months. India's product exports averaged 1.4 mb/d, returning to somewhat robust levels. At 2.7 mb/d in February, Japan's crude imports remained essentially constant month over month. LPG shipments from Japan reached a five-month high in February. A workers' strike in France affected port operations and refinery operations in March, which reduced trade flows and resulted in a decline in imports of crude and processed products into OECD Europe.

Commercial Stock Movements

The total OECD commercial oil stocks increased by 14.1 mb m-o-m in February 2023, according to preliminary data. At 2,865 mb, they were 237 mb more than they were at the same time last year, 18 mb higher than the most recent five-year average, but 54 mb lower than the average for the years 2015 to 2019. Within components, crude stock levels rose m-o-m by 20.9 mb while product stock levels decreased m-o-m by 6.8 mb. At 1,434 mb, OECD crude stockpiles were 14 mb lower than the average for 2015 to 2019 but 172 mb more than the same time last year. They were also 49 mb higher than the most recent five-year average. OECD product stocks were 1,432 megabytes, up 65 mb from the same point in the previous year, but down 30 mb from the most recent five-year average and 40 mb from the average for the period from 2015 to 2019. Days of forward cover for OECD commercial stocks increased m-o-m in February by 1.0 day to 62.9 days. This is 1.8 days less than the most recent five-year average and 0.3 days more than the average for the years 2015 to 2019. It is 4.9 days above the level of February 2022.

Balance of Supply and Demand

The estimate for 2022 demand for OPEC crude remains at 28.4 mb/d from last month. Around 0.5 mb/d more than in 2021, this. Additionally, the demand for OPEC crude in 2023 was projected to stay flat from the earlier estimate at 29.3 mb/d. Compared to 2022, this is about 0.8 mb/d higher.