13 April 2018 HIGHLIGHTS • Our forecast for global oil demand growth for 2018 is unchanged from last month’s report at 1.5 mb/d. OECD demand in 1Q18 was revised up by 315 kb/d, partly due to cold weather in the US and the start-up of a petrochemical project. There are offsetting reductions to growth in 2Q and 3Q. • Non-OECD demand in 1Q18, by contrast, has been revised down by 260 kb/d due to weak Chinese data. India’s early 2018 growth is strong at 380 kb/d y-o-y in the first two months. • Global oil supply eased by 120 kb/d in March, to 97.8 mb/d, after OPEC and non-OPEC producers deepened their cuts to 2.4 mb/d. Output was nevertheless 1.4 mb/d higher than a year ago mainly due to higher US production. Non-OPEC supply is set to grow by 1.8 mb/d in 2018. • OPEC crude production fell by 200 kb/d in March, to 31.83 mb/d, on further declines in Venezuela and lower output in Africa. Compliance with the output deal reached 163%. The call on OPEC crude and stocks will hover around 32.5 mb/d for the rest of this year. • OECD commercial stocks declined by 26 mb to 2 841 mb and were just 30 mb above the five-year average at end February. The average could be reached by May, on the assumption of tight balances in 2Q18. Product stocks are already in deficit. • ICE Brent futures averaged $66.72/bbl in March and in recent days have risen above $70/bbl to levels not seen since December 2014. Tension in the Middle East is a key factor alongside tighter compliance with the OPEC/non OPEC output deal. • After 1Q18’s peak refinery maintenance in Europe and the US, global throughput will see a seasonal ramp-up in 2Q18. From March to July, runs will increase by 3.1 mb/d, but supply of refined products will lag behind demand growth. TABLE OF CONTENTS HIGHLIGHTS ............................................................................................................................................................................................ 1 Mission accomplished? ............................................................................................................................................................................. 3 DEMAND ................................................................................................................................................................................................... 4 Summary ................................................................................................................................................................................................ 4 Fundamentals ........................................................................................................................................................................................ 4 OECD ..................................................................................................................................................................................................... 6 Non-OECD ........................................................................................................................................................................................ 10 Other Non-OECD ...................................................................................................................................................................... 12 SUPPLY .................................................................................................................................................................................................... 15 Summary ............................................................................................................................................................................................. 15 OPEC crude oil supply .................................................................................................................................................................... 17 Non-OPEC overview ...................................................................................................................................................................... 19 OECD .................................................................................................................................................................................................. 20 North America ............................................................................................................................................................................. 20 North Sea ...................................................................................................................................................................................... 23 OECD Asia Oceania ................................................................................................................................................................... 24 Non-OECD ........................................................................................................................................................................................ 25 Latin America ............................................................................................................................................................................... 25 Middle East .................................................................................................................................................................................... 26 Asia .................................................................................................................................................................................................. 26 Africa .............................................................................................................................................................................................. 27 Former Soviet Union .................................................................................................................................................................. 27 STOCKS .................................................................................................................................................................................................. 28 Summary ............................................................................................................................................................................................. 28 Recent OECD industry stock changes ....................................................................................................................................... 29 OECD Americas .......................................................................................................................................................................... 29 OECD Europe .............................................................................................................................................................................. 30 OECD Asia Oceania ................................................................................................................................................................... 30 Other stock developments ............................................................................................................................................................ 31 China’s SPR to fill at higher rate in 2018 ........................................................................................................................................ 32 PRICES ...................................................................................................................................................................................................... 34 Summary ............................................................................................................................................................................................. 34 Futures markets ................................................................................................................................................................................ 34 Spot crude oil prices ........................................................................................................................................................................ 35 Spot product prices ......................................................................................................................................................................... 37 Freight ................................................................................................................................................................................................. 38 China’s crude futures off to a strong start ....................................................................................................................................... 39 REFINING ............................................................................................................................................................................................... 41 Summary ............................................................................................................................................................................................. 41 Perfect storm brewing for refiners? ................................................................................................................................................... 42 Margins ..........................................................................................................................................................................................