Paris, 12 May 2011

Crude prices surged again in April (undermining already weak refining margins), but saw an abrupt correction on 5 May as benchmark grades lost around 9% in a single day. A faltering economic recovery, stronger dollar and speculative commodity sell‐off were variously cited as underpinning the correction.

• After gaining $7‐8/ bbl in April, prices for benchmark Brent and WTI plummeted more than $16/bbl over the course of the week ended 6 May, to $109.13 and $97.18/bbl, respectively, during a broad commodity rout. Prices have since partially recovered their losses, with Brent trading at $115/bbl and WTI at $101/bbl at press time.

• Forecast global oil product demand growth for 2011 is trimmed on persistent high prices and weaker IMF GDP projections for advanced economies. Global demand, which averaged 87.9 mb/d in 2010 (+3.3% or +2.8 mb/d year‐on‐year), is projected to reach 89.2 mb/d in 2011 (+1.5% or 1.3 mb/d versus the previous year).

• Global oil supply dipped by 50 kb/d to 87.5 mb/d in April, with combined OPEC crude and NGL supply lower by 0.26 mb/d, while non‐OPEC production rose by 0.2 mb/d. Baseline data changes to non‐OPEC raised average 2010 supply by 0.1 mb/d to 52.9 mb/d, while 2011 estimates are adjusted down 0.1 mb/d to 53.7 mb/d, implying annual growth of +0.8 mb/d.

• OPEC supply continued its downward trend in April, with Libyan supply shuttered in the wake of the worsening civil war. April OPEC output was pegged at 28.75 mb/d, off by 235 kb/d from March and 1.3 mb/d below January levels. The ‘call on OPEC crude and stock change’ rises by 800 kb/d from an average of 29.3 mb/d in 2Q11 to 30.1 mb/d in 3Q11.

• OECD industry stocks declined by 9.2 mb, to 2 643 mb or 58.8 days cover in March, as seasonal refinery maintenance substantially reduced product stocks. Preliminary April data indicate a 29.9 mb increase in commercial OECD inventories, while oil held in short‐term floating storage fell.

• Global refinery crude runs estimates have been revised down by 740 kb/d for 2Q11, mainly due to significantly lower April OECD runs in North America and Europe. Global throughputs are seen averaging 73.8 mb/d in 2Q11, down from 74.2 mb/d in 1Q11, but stand to increase by more than 3.5 mb/d by August from April’s low point.

Ends --