The Organisation of Petroleum Exporting Countries (OPEC) Reference Basket notched up a second month of gains in February, particularly in the first half of the month.
On a monthly basis, the Reference Basket improved to an average of $112.75 per barrel (/b) in February, constituting an increase of $3.47/b or 3.2 percent over the previous month. Year-to-date (ytd), the Basket averaged $110.93/b, compared with last year’s average of $114.62/b for the same period, a decline of $3.61/b or 3.1percent, according to OPEC latest monthly oil market report.
Global crude markets were supported earlier in the month by strong bullish sentiment, driven by growing optimism about the global economic recovery.
Signs that the economies of the US and China were recovering at a quicker pace than before bolstered confidence that economic growth and oil demand were accelerating. The oil complex, along with equities and financial markets, rose in this period. The markets also received support from the strength of the refined product market, particularly the gasoline sector in the US East Coast (USEC) amid several refinery glitches.
“The oil complex was also boosted by expectations that world oil demand would increase faster than previously projected in 2013. However, towards the end of the month, the market’s upward momentum was hampered by a loss in confidence in the global economy, after an unexpected dip in US industrial production spurred concern about lagging economic activity. Political uncertainty in Italy added to bearishness along with lackluster GDP data out of Europe, raising questions about oil demand. Nevertheless, the Basket managed to improve by over 3percent,” OPEC report stated.
All the Basket’s component values increased in February, particularly Venezuelan Merey. For the second consecutive month, Merey, along with all Latin American heavy crudes imported into US Gulf Coast (USGC) rose by over 5percent, as West Texas Sour (WTS) – part of its pricing formula – continued to emerge from the record low prices witnessed over the past few months.
