Oil prices continued to see steep declines during January, 2015 in one of the most volatile months for the oil market in recent history, an economic report showed Sunday.
The report, issued by KIPCO Asset Management Company (KAMCO), said that the average oil prices declined for the seventh consecutive month in a row across all baskets as global markets continued to be oversupplied and demand had yet to pick up.
It noted that the OPEC daily oil price has moved on an average by USD 1.19/bbl during 2015, which is the highest level for a year since 2008 when the average daily price movement was recorded at USD 1.49/bbl.
"Some of the key factors that have led to the steep decline in oil price are the global oversupply in the oil market, a record crude inventory build in the US, a strong US dollar and a slowing Chinese oil demand growth," reads the report. OPEC Reference Basket settled at an average of around USD 44.4/b during January, its lowest value since February 2009, down by a steep USD 15.1/b or around 25.4 percent below last month's price level when it reached an average of USD 59.5/b, and closed the month at a low of USD 44.8/b. However, oil prices have started picking up since the last week of January and in February it was up by 17.9 percent to USD 52.86/b by 12th February. Meanwhile, the data also showed that the Kuwait Blend Spot Price FOB averaged USD 42.3/b during January 2015, down from an average of USD 58.3/b in December 2014 or by around 27.4 percent.
"Kuwait oil closed the month at a low of USD 42.24/b, that is a drop of around 19.8 percent compared to December 2014 closing price of USD 52.65/b. However, the price trend reversed as it entered February2015, in line with OPEC oil, and recorded a gain of 30.2 percent or USD 12.77/b to reach USD 55.01/b as of 13-February 2015. The average monthly price for the first twelve days of February also increased to USD 52.01/b," added the report. The European Brent Spot Price FOB averaged around USD 47.9/b, down from an average of USD 62.5/b recorded during December-14. The basket closed the month at USD 47.52/b, lower by 14.0 percent compared to last month closing price. In line with other oil prices, the Brent prices also reversed during February 2015 to settle at USD 57.00/b as of 9-February 2015.
KAMCO also stated that the total world oil demand growth for 2014 was kept broadly unchanged from last month's forecast and is estimated at 0.96 Mn b/d, or an increase of 1.06 percent, to stand at 91.15 Mn b/d compared to 90.20 Mn b/d for the year 2013.
According to OEPC Monthly Report, there was no change in total demand from OECD countries, which was recorded at 45.73 m b/d. Within the Developing Countries, the demand was slightly upgraded for India, from 3.78 m b/d to 3.79 m b/d along with marginal changes in demand figures for Latin America, Middle East and Africa. The demand in China was also increased slightly from 10.45 m b/d to 10.46 m b/d in the new report.
OPEC production increased by 1.6 percent during January, to stand at 30.91 Mn b/d, an increase of 483 thousand b/d compared to the previous month. The increase in oil production came mainly from higher production by Saudi Arabia and Kuwait in the GCC as well as in Iraq, Iran, and Angola together amounting to a total increase of 0.680 Mb b/d during the month.
On the other hand, the increase in oil production was partially offset by decline primarily in Libya and Nigeria.
Total non-OPEC supply has been revised up by 20 tb/d compared to last month's forecast and is now estimated to have averaged 56.23 mb/d by the end of 2014, an increase of 1.99 Mn b/d or 3.67 percent.
This growth is mainly attributable to the upward 4Q14 revisions in the OECD (US, Canada and Norway), Brazil, Kazakhstan and China, partially offset by downward revisions for Azerbaijan, Other Asia Pacific, Australia and Mexico.