Paris, 15 January 2010

HIGHLIGHTS

• Crude oil prices surged to 15‐month highs in early January on very cold winter weather in much of the northern hemisphere and escalating geopolitical tensions in key oil producing countries. At their peak, prices had jumped by around $10‐12/ bbl from December lows. Prices have since eased, last trading in a $78‐80/bbl range. • Global supply rose 270 kb/d in December to 86.2 mb/d, on both higher OPEC and non‐OPEC output. A reappraisal of Azerbaijan’s crude production outlook leads to a ‐150 kb/d revision for 2010 non‐OPEC supply, to 51.5 mb/d. Non‐OPEC output this year will grow 0.2 mb/d from a modestly‐revised 51.3 mb/d in 2009, driven by biofuels and rising crude supply in Brazil, the FSU, Australia, Colombia and India.

• OPEC‐12 crude output rose 75 kb/d to 29.1 mb/d in December, resulting in effective spare capacity of 5.4 mb/d. OPEC ministers left output targets unchanged at their 22 December meeting, but called for better compliance. The ‘call on OPEC crude and stock change’ stands at 28.7 mb/d for 1Q10 and 29.1 mb/d for 2010. OPEC NGLs are forecast to increase sharply by 885 kb/d to 5.7 mb/d in 2010.

• Forecast global oil demand remains virtually unchanged at 84.9 mb/d in 2009 (‐1.5% or ‐1.3 mb/d year‐on‐year) and 86.3 mb/d in 2010 (+1.7% or +1.4 mb/d versus the previous year). Growth is driven by non‐OECD countries, most notably in Asia. Oil demand recovery in the OECD will likely remain sluggish, despite the recent cold weather.

• OECD industry stocks rose 12.6 mb in November to 2 747 mb, 2.0% above 2008’s level. Yet preliminary data point to product draws, onshore and offshore, due to colder winter temperatures in December and early January. End‐November days of forward demand cover fell to 59.1 days, 1.9 days higher than a year ago.

• Global 1Q10 refinery crude throughput is forecast at a slightly lower 72.7 mb/d, while global 4Q09 crude throughput is assessed at an unchanged 72.3 mb/d. With OECD stocks still high and global demand recovery as yet anaemic, the refining industry outlook for 1Q10 is not promising, suggesting further weakness in throughputs.

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