18 January 2013 HIGHLIGHTS • Crude oil prices edged higher as 2012 drew to a close, gathering strength from seasonally stronger winter demand and geopolitical concerns. By mid-January, prices were trading above December levels, with Brent at $110.75/bbl and WTI around $95.15/bbl. • The world is forecast to consume 90.8 mb/d of oil in 2013, 240 kb/d more than in last month’s report and 930 kb/d (1.0%) up on 2012. A raised 4Q12 demand estimate and heightened expectations for China are the main contributors to the hike. • Global supplies fell by 170 kb/d in December, to 91.2 mb/d. Non- OPEC production rebounded by 90 kb/d from the prior month, to 54.2 mb/d and is expected to increase by 590 kb/d in 1Q13 y-o-y. For 2013, non-OPEC production is projected to rise by 980 kb/d to 54.3 mb/d, the highest growth rate since 2010. • OPEC crude supply in December fell to its lowest level in a year at 30.65 mb/d on lower output from Saudi Arabia and Iraq. Average OPEC crude output reached an historic high in 2012 in the wake of continued global demand growth. The ‘call on OPEC crude and stock change’ for 2013 was raised by 100 kb/d, to 30 mb/d. • OECD industry inventories drew by 18.7 mb in November, led by a further drop of 11 mb in middle distillate stocks, extending earlier declines. On a forward demand basis, total products cover fell by 0.5 days to 30 days in November. December preliminary data point to a further 18.4 mb decline in OECD industry inventories. • Global refinery runs rose 1.5 mb/d y-o-y to around 75.9 mb/d in 4Q12, with growth in refining activity concentrated in China, India and Russia. Favourable refining margins, a gradual reduction in offline capacity and a cold snap in Asia and the FSU supported refinery throughputs in the last months of 2012. TABLE OF CONTENTS HIGHLIGHTS 1 CROUCHING TIGER, HIDDEN DRAGON 3 DEMAND 4 Summary 4 Global Overview 4 Top-10 Consumers 5 Chinese Demand Forecast Upgraded 7 OECD 11 Americas 12 Europe 12 Asia Oceania 12 Non-OECD 13 SUPPLY 14 Summary 14 OPEC Crude Oil Supply 15 Non-OPEC 20 OECD 20 Americas 20 Up Against the Export Wall: Hurdles to US LTO Production Growth 22 North Sea 27 OECD Asia 27 Non-OECD 28 Former Soviet Union 28 Middle East 29 Africa 29 Latin America 29 Asia 30 OECD STOCKS 31 Summary 31 OECD Inventory Position at End-November and Revisions to October Data 31 Analysis of Recent OECD Industry Stock Changes 32 OECD Americas 32 OECD Europe 33 OECD Asia Oceania 34 Recent Developments in Singapore and China Stocks 35 PRICES 37 Summary 37 Market Overview 37 Futures Markets 39 Activity Levels 39 Market Regulation 41 The Changing Structure of Energy Trading Markets 42 Spot Crude Oil Prices 44 Spot Product Prices 46 Freight 48 REFINING 49 Summary 49 Global Refinery Overview 49 OECD Refinery Throughputs 52 Non-OECD Refinery Throughputs 56 TABLES 61 INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT MARKET OVERVIEW 3 18 JANUARY 2013 CROUCHING TIGER, HIDDEN DRAGON This first Report since the year-end holidays paints a sobering, ‘morning after’ view of the oil market. In one fell swoop, the estimate of the ‘Call on OPEC’ for 4Q12 has been nudged up by 400 kb/d. All of a sudden, the market looks tighter than we thought. On the demand front, a marked departure in Chinese apparent demand from the preceding low-growth trend brings to mind Napoleonic metaphors about awakening dragons. On the supply front, a down tick in Saudi production from the 30-year highs that had characterised it through so much of last year gave headline writers a field day, sparking much hand wringing about Saudi budget needs and price appetite. OECD inventories are getting tighter – a clean break from the protracted and often counter-seasonal builds that had been a hallmark of 2012. 5 6 7 8 9 10 11 Jan Mar May Jul Sep Nov Jan mb/d China Range 07-11 Average 07-11 2012 2011 Refinery runs 7.5 8.0 8.5 9.0 9.5 10.0 10.5 Jan Ma r May Jul Sep Nov Jan mb/d Saudi Arabia Range 07-11 Average 07-11 2011 2012 Crude Production It may be too early, however, to declare the start of a new market cycle or a return to the bull market of yesteryear. Both Chinese demand and Saudi supply are too complex for hasty interpretations. In hindsight, the latest twists in Chinese and Saudi data may partly reflect fleeting factors. The dip in Saudi supply, for one, seems less driven by price considerations than by the weather. Analysts often lose sight of the fact that Saudi Arabia has become its own single largest customer. A dip in air conditioning demand – as well as reduced demand from refineries undergoing seasonal maintenance – likely goes a long way towards explaining reduced output. Nothing for the global market to worry about. Chinese data are another story. The prospects for the Chinese economy, ultimately the main driver of the country’s demand, are as clear as the Beijing sky. Chinese economic indicators have been mixed, but recent bullish readings have signalled the potential for a rebound. There is no lack of alternative explanations for the latest demand data, though. First, tax changes might have offered market participants – including the so-called ‘teapot’ refineries an incentive to boost refinery runs before they came into effect. Apparent 4Q12 demand might thus include ‘borrowed’ 1Q13 demand. Second, record- high refinery runs – supported also by the start-up of a swath of new state-owned capacity – likely caused large product builds, weakening the validity of apparent demand estimates. As the country’s refining capacity leaps ahead of demand growth, apparent demand will become an increasingly blunt and misleading proxy for consumption. Brutal swings in apparent demand in both directions may become a fact of life, masking unreported inventory builds and draws. The bull market of 2003-2008 was all about demand growth and perceived supply constraints. The bear market that followed was all about financial meltdown. Today’s market, as the latest data underscore, has a lot to do with political risk writ large, and not just in Syria, Iran, Iraq, Libya or Venezuela. Changes in tax and trade policies, in China as in Russia, can, at the stroke of a pen, shakeup crude and products markets and redraw the oil trade map. Producer country policies on power generation and price subsidies loom as large in oil supply as E&P investment or EOR technology. As producer demand grows, so will those policies’ impact. Nor are OECD economies free from political risk. The abrupt shifts in oil markets in the last year expose instances where resources and regulations – such as export and shipping legislation – have become misaligned. Bringing tomorrow’s oil supply to market may hinge on resolving those ‘above-ground’ issues as much as on geology, investment, technology or anything else. DEMAND INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT 4 18 JANUARY 2013 DEMAND Summary • Estimates of global oil demand for 2012 have been revised upwards to 89.8 mb/d on stronger-than- expected 4Q12 data. Demand growth for 2012 is now estimated at 975 kb/d (or 1.1%), 175 kb/d more than assumed in December’s OMR. Fourth-quarter demand surprised on the upside, with the greatest upwards revisions seen in China (+200 kb/d), the US (+155 kb/d) and Brazil (+155 kb/d). The demand forecast for 2013 has been revised upwards by 240 kb/d, to 90.8 mb/d, underpinned by higher Chinese demand expectations; yet continuing concerns about the macroeconomic environment keep growth relatively restrained at 930 kb/d. Global Oil Demand (2011-2013) (million barrels per day) 1Q11 2Q11 3Q11 4Q11 2011 1Q12 2Q12 3Q12 4Q12 2012 1Q13 2Q13 3Q13 4Q13 2013 Africa 3.3 3.3 3.2 3.3 3.3 3.4 3.4 3.4 3.5 3.4 3.5 3.5 3.5 3.6 3.5 Americas 30.3 30.1 30.7 30.4 30.4 29.8 30.3 30.5 30.7 30.3 30.0 30.2 30.8 30.9 30.5 Asia/Pacific 29.0 27.7 27.8 29.2 28.4 30.0 28.7 28.8 30.3 29.4 30.6 29.4 29.3 30.5 29.9 Europe 14.9 14.8 15.4 14.8 15.0 14.4 14.5 14.5 14.6 14.5 14.0 14.0 14.5 14.5 14.3 FSU 4.2 4.4 4.6 4.6 4.4 4.5 4.5 4.7 4.7 4.6 4.6 4.6 4.8 4.9 4.7 Middle East 6.9 7.4 7.8 7.3 7.4 7.1 7.7 8.0 7.5 7.6 7.3 7.8 8.3 7.7 7.8 World 88.7 87.6 89.4 89.7 88.9 89.1 89.0 90.0 91.2 89.8 90.1 89.6 91.3 92.0 90.8 Annual Chg (%) 2.5 0.4 0.8 0.2 0.9 0.5 1.5 0.6 1.7 1.1 1.1 0.8 1.4 0.9 1.0 Annual Chg (mb/d) 2.1 0.4 0.7 0.2 0.8 0.5 1.3 0.5 1.6 1.0 1.0 0.7 1.3 0.8 0.9 Changes from last OMR (mb/d) 0.00 0.00 0.00 0.00 0.00 0.00 0.02 -0.02 0.71 0.17 0.12 0.15 0.20 0.49 0.24 • Chinese manufacturing sentiment continued to improve in 4Q12, supporting an apparent uptick in oil demand growth in the world’s second largest consumer. Chinese implied demand reached an estimated 10.1 mb/d in 4Q12, an increase of 700 kb/d on the year. Coming on the heels of relatively slow growth through most of 2012, the 4Q12 acceleration surprised with its velocity. This heady pace of growth is unlikely to be sustained in 2013, as one-off factors helped support 4Q12 demand, but the forecast for the year as a whole has still been revised higher by 135 kb/d, to 10 mb/d. Chinese demand growth for 2013 is now projected at 390 kb/d (or 4.0%). • Early indicators of 4Q12 US demand point to higher-than-expected average consumption of 18.8 mb/d, 155 kb/d more than the projection carried last month, but still down by 100 kb/d (or 0.5%) on the year. The 4Q12 decline is the shallowest contraction in US demand in nearly two years. Global Overview The latest global demand estimate for 4Q12 comes out at 91.2 mb/d, equivalent to year-on-year growth of 1.7 mb/d (or 1.7%). This is 710 kb/d more than forecast in last month’s Report. The most notable 4Q12 upwards revisions centred on China (200 kb/d higher), the US (+155 kb/d), Brazil (+155 kb/d), Russia (+55 kb/d), Korea (+40 kb/d), Belgium (+40 kb/d) and Saudi Arabia (+30 kb/d). Underpinning these adjustments were higher-than-expected October estimates, with the biggest revisions being the US (235 kb/d higher), Brazil (+225 kb/d), China (+155 kb/d) and Saudi Arabia (+95 kb/d). Those revisions more than offset downwards adjustments to demand for the UK (50 kb/d lower), India (-45 kb/d), Germany (-40 kb/d), Canada (-30 kb/d) and Russia (-15 kb/d). Preliminary November data also impacted the 4Q12 demand estimate, with big additions being seen in data for China, the US, Brazil, Korea, Russia and France, offsetting downward adjustments for India, Italy, Spain and Poland. INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT DEMAND 18 JANUARY 2013 5 Global Oil Demand Growth 2011/2012/2013 thousand barrels per day ( mb/d ) 2011 0.84 1.0% 2012 0.98 1.1% 2013 0.93 1.0% Global Demand Growth 206 256 155 229 49 194 118 124 2 North America Latin America Africa Middle East Europe 664 1017 507 Asia -333 -488 -224 281 134 164 FSU -75 -241 15 For 2012 as a whole, global demand is estimated at 89.8 mb/d, 975 kb/d (or 1.1%) more than in 2011, with strong Asian demand (+1.0 mb/d) leading the increase. Non-OECD Asian demand expanded by an estimated 675 kb/d, or 3.3%, while Japanese fuel switching away from nuclear power generation supported OECD demand growth. Projections for 2013 demand growth remain relatively subdued at 930 kb/d (to 90.8 mb/d). Upwards revisions to Chinese demand forecasts fail to offset continued concerns about the broader macroeconomic environment and reduced support from Japanese fuel switching. Global Oil Product Demand 70,000 75,000 80,000 85,000 90,000 1996 2000 2004 2008 2012 kb/d -1,400 -600 200 1,000 1,800 2,600 Y-o-Y Chg World: Oil Demand Growth by Product, 2009-2013, mb/d (1.0) (0.5) - 0.5 1.0 1.5 2009 2010 2011 2012 2013 (2.0) (1.0) - 1.0 2.0 3.0 Gasoline Distillates LPG & Naphtha Fuel Oil Other Total (RHS) Top-10 Consumers Opposite seasonal factors in two of the world’s top consumers saw Brazil and Saudi Arabia switch positions in our top-10-rankings for October, as reduced air conditioning demand in Saudi Arabia countered the impact of a counter-seasonal gain in Brazil. Both nations traditionally see falling month- on-month demand trends in October, but only Saudi Arabia fell in October 2012. Germany and Canada also traded places, as Canadian demand fell seasonally month-on-month in October, but German demand rose counter-seasonally. Mexico also made a late run for tenth spot in the October rankings, replacing South Korea as expected. The change occurred as additional replacement demand arose on account of the closure of Pemex’s Reynosa gas processing facility. Korea will likely soon regain its 10 th spot in the rankings, as strong seasonal domestic demand is likely to return in November. DEMAND INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT 6 18 JANUARY 2013 Top-10 Oil Consumers (thousand barrels per day) Oct-12 2012 2013 Oct-12 2012 2013 Oct-12 2012 2013 US50 18,781 18,696 18,702 -121 -313 6 -0.6 -1.6 0.0 China 9,749 9,595 9,984 739 352 388 8.2 3.8 4.0 Japan 4,422 4,698 4,529 28 234 -169 0.6 5.2 -3.6 India 3,624 3,645 3,747 165 131 101 4.8 3.7 2.8 Russia 3,389 3,370 3,520 -14 118 150 -0.4 3.6 4.5 Brazil 3,193 3,018 3,098 272 124 80 9.3 4.3 2.7 Saudi Arabia 3,116 3,040 3,167 304 166 127 10.8 5.8 4.2 Germany 2,510 2,349 2,326 2 -52 -23 0.1 -2.1 -1.0 Canada 2,278 2,329 2,329 88 40 0 4.0 1.7 0.0 Mexico 2,275 2,151 2,157 206 18 7 10.0 0.8 0.3 % global demand 59% 59% 59% Demand Annual Chg (kb/d) Annual Chg (%) Collectively the world’s ten largest oil consumers used 53.3 mb/d of oil products in October, which roughly accounts for two-thirds of total global demand. US Preliminary estimates of 4Q12 US50 demand surprised on the upside, with average consumption now predicted at 18.84 mb/d, 155 kb/d higher than projected in December’s OMR. Although the updated 4Q12 demand estimate is still 100 kb/d (or 0.5%) below 4Q11 figures, the annual decline rate was the shallowest in nearly two years. Domestic transportation fuels led the revival, jet fuel demand rose by an estimated 1.4% (to 1.42 mb/d) and gasoline by 0.2% (to 8.65 mb/d). US50: Total Oil Product Demand 17,500 18,500 19,500 20,500 21,500 Jan Apr Jul Oct Jan kb/d Range 07-11 5-year avg 2011 2012 US50: Motor Gasoline Demand 8,200 8,600 9,000 9,400 9,800 Jan Apr Jul Oct Jan kb/d Range 07-11 5-year avg 2011 2012 Diminished pessimism has emerged in recent months: with the political status-quo maintained without too much fuss; higher than anticipated 4Q12 demand; and, most importantly, the initial stages of the circumnavigation of the US ‘fiscal cliff’. True, further flash points lie in wait concerning the US debt ceiling, but January’s much anticipated hurdle passed without too much pain for world economies, providing support for the IMF’s long held belief that economic growth will remain above 2% in 2013. Indeed, such predictions of relative macroeconomic buoyancy allow us to maintain our belief that US demand will essentially remain flat on the year. China Strong Chinese apparent demand growth in October of 740 kb/d y-o-y, to 9.7 mb/d, cements China’s place as the world’s second largest oil consumer. Preliminary estimates for November imply further gains of around 830 kb/d, to 10.4 mb/d – an all-time high. A surge in refinery runs on the back of new refining capacity underpinned the increase in apparent demand (i.e. refinery output plus net product imports). A January adjustment in excise duties, which brought blending components under the excise net, may have INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT DEMAND 18 JANUARY 2013 7 artificially inflated November and December apparent demand, however. End-2012 demand may thus in effect represent in part “borrowed demand” from early 2013. In addition, surging throughputs likely caused steep product stock builds at the end of 2012, which may be drawn down later on, alongside unreported builds of strategic stocks. Chinese Demand Forecast Upgraded China alone accounted for nearly two-thirds of total oil product demand growth between 2007 and 2011, but Chinese demand growth all but disappeared from September 2011-through-August 2012. Chinese apparent demand picked up momentum in September, however, as apparent growth rebounded to 915 kb/d (or 10.3%), up from an average 110 kb/d (or 1.2%) in the previous 12 months. Demand growth remained robust in October and November. These gains are the leading factor behind the upwards revisions to global 4Q12 demand estimates in this month’s Report. Initial pessimism regarding the short-term Chinese data led us to keep a lid on demand forecasts, but recent data suggest that the tide may have begun to turn. Manufacturing sentiment became “expansionary” (i.e. above 50) in November, albeit only marginally, after a long spell contracting when the index came in below 50, and has maintained this bias, rising into December. The Chinese trade figures, although mixed of late, provide additional support for the ‘stronger Chinese demand’ story. Total Chinese exports rose by 14.1% y-o-y in December, to $199.23 billion, outpacing imports which rose by a more modest 6%. This is in contrast to November, when exports rose by just 2.9% y-o-y. Other supportive influences include stronger electricity use (with double- digit percentage point gains returning in December, against a 2012 average of 5.5%) and increased rail usage, with 11% y-o-y more passengers carried in December. Restraining the upside – hence the still below consensus 4% 2013 projection – are concerns about the sustainability of the Chinese upturn: as heightened debt levels, an enlarged shadow banking system, and worrisome property markets loom. Infrastructural spending provided large chunks of the late-2012 momentum. While this is not something that can continue ad-infinitum, additional infrastructural expenditure is the key reason we are revising up the 2013 Chinese growth forecast, by 135 kb/d, to 10 mb/d – a projected annual expansion of 390 kb/d or 4%. China watchers, such as CICC, BNP Paribas and HSBC, appear confident that the new Chinese political leadership will rely on infrastructural projects as a form of economic stimulus, at least through its first full year in office. On the flip-side, the resumption of rising inflation in December, to a six-month high of 2.5% over the prior year, may limit the scope for government support. Underpinning stronger growth predictions will be China’s plentiful demand for cheap plastics, which will support robust naphtha demand, while predictions of 7% growth in new-vehicle sales (up from 4.3% in 2012) will underpin gasoline demand – though not at the pace seen at the end of 2012, when one-off factors provided support. Continued growth in air passenger traffic (which rose by 9.2% in 2012) will accordingly support demand for jet fuel. China: Total Oil Product Demand 6,500 7,500 8,500 9,500 10,500 Jan Apr Jul Oct Jan kb/d 2009 2010 2011 2012 Chinese Manufacturing PMI 47 48 49 50 51 52 Oct11 Feb12 Jun12 Oct12 Note: 50=contraction/expansion threshold. Sources: HSBC, Markit DEMAND INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT 8 18 JANUARY 2013 China: Demand by Product (thousand barrels per day) Annual Chg (kb/d) Annual Chg (%) 2011 2012 2013 2012 2013 2012 2013 LPG & Ethane 720 731 742 12 11 1.6 1.5 Naphtha 1,113 1,130 1,209 18 79 1.6 7.0 Motor Gasoline 1,754 1,914 2,029 160 115 9.1 6.0 Jet Fuel & Kerosene 419 438 453 19 15 4.5 3.5 Gas/Diesel Oil 3,193 3,232 3,356 39 124 1.2 3.8 Residual Fuel Oil 507 517 519 9 3 1.8 0.5 Other Products 1,538 1,634 1,675 95 42 6.2 2.6 Total Products 9,243 9,595 9,984 352 388 3.8 4.0 Demand Chinese demand estimates for 2012 have been revised upwards by around 50 kb/d since last month’s Report, to 9.6 mb/d, on the strength of the preliminary 4Q12 data. Estimates for 4Q12 have been raised by 200 kb/d, to 10.1 mb/d, a y-o-y gain of 7.4%, in line with signs of stronger manufacturing sentiment. HSBC’s Chinese Manufacturing Purchasing Managers’ Index (PMI) rose to 51.5 in December, its second consecutive month above the key 50-threshold. Readings above 50 indicate that more survey respondents anticipate expanding conditions than contracting. Japan Japanese demand growth eased in October to 0.6% bringing consumption to an average of around 4.42 mb/d. Last month’s OMR had assumed slightly more subdued growth of 0.2%. The weaker growth seen in October is a dramatic climb-down from the 7.3% average expansion seen in the previous twelve months, when fuel switching out of nuclear power generation lifted demand for fuel oil and ‘other products’ by 39.4% and 43.1%, respectively. Although the pace at which this replacement demand unwinds is forecast to be slow, no new replacement-demand is anticipated since 2011, hence the step change in year-on-year growth. Preliminary estimates of November demand, based on inland-deliveries, hint at a further deceleration to 0.1% y-o-y growth, to 4.61 mb/d. This is 30 kb/d more than projected last month, as a cold spell supported stronger-than-expected kerosene demand. Japan: Total Oil Product Demand 3,500 4,000 4,500 5,000 5,500 6,000 Jan Apr Jul Oct Jan kb/d Range 07-11 5-year avg 2011 2012 Japan: Other Products Demand 250 350 450 550 650 750 Jan Apr Jul Oct Jan kb/d Range 07-11 5-year avg 2011 2012 India India consumed a revised 3.6 mb/d of oil products in October, 45 kb/d less than assumed in last month’s report but still 165 kb/d higher than the year earlier. Gasoil led the growth momentum, contributing roughly half of the total growth, followed by LPG (+25 kb/d), gasoline (+20 kb/d) and naphtha (+20 kb/d). Growth came to a near-complete standstill in November, according to preliminary statistics, with significant y-o-y contractions seen in fuel oil, LPG and jet/kerosene. Gasoil demand growth eased to a 19-month low, as better weather patterns required less diesel-powered irrigation, while the spill-over INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT DEMAND 18 JANUARY 2013 9 from September’s subsidy reduction (equivalent to a 14% rise in the price of diesel) continued. Demand averaged roughly 3.7 mb/d in November and is expected to average 3.6 mb/d for the year as a whole, 130 kb/d more than in 2011. India: Gasoil Demand 800 1,000 1,200 1,400 1,600 Jan Apr Jul Oct Jan kb/d Range 2007-2011 5-year avg 2011 2012 Russia: Total Oil Product Demand 2,600 2,800 3,000 3,200 3,400 3,600 Jan Apr Jul Oct Jan kb/d Range 2007-2011 5-year avg 2011 2012 Source: Petromarket RG, IEA Russia Revised estimates of Russian demand depict it averaging 3.4 mb/d in October, 15 kb/d less than we assumed a month ago and down 0.4% on the corresponding month a year earlier, its first y-o-y decline since July 2010. Between August and October, Russian demand growth averaged just 0.4% year-on-year, well down on the previous 12-month trend (7.2%). The slowdown is largely attributable to above trend growth in 2011 and, hence, is likely to have ended in November, when growth is forecast to resume at around 3.4%, as demand averages 3.6 mb/d. Russian consumption for the year as a whole is projected at 3.4 mb/d, 3.6% up on 2011. Growth is forecast to accelerate in 2013, to 4.5%, as momentum in Russia gains on the expanded income base. Brazil Brazil leapfrogged Saudi Arabia into sixth place in the top-10 rankings of oil consumers for October, as demand rose counter-seasonally by 160 kb/d month-on-month, against a five-year average contraction of 5 kb/d. Stronger gasoil and gasoline demand underpinned the October turn-around, rising by 75 kb/d and 60 kb/d m-o-m, respectively, versus flat five-year averages. Gasoil demand rising as additional diesel- fired power generation was required to compensate for dwindling drought-hit hydropower supplies. The lower ethanol-mix of the gasoline blend by default boosted gasoline demand. Brazil consumed 3.2 mb/d of oil products in October, a gain of 9.3% on the year earlier (a two-year high) and 225 kb/d more than the estimate carried last month. A similar aggregate number is foreseen in November, amounting to 160 kb/d more demand than forecast earlier. Gasoline and gasoil account for the bulk of the upside in both months, as the previously ailing economy showed clear signs of recovery towards the end of the year. Manufacturing sentiment, as tracked by HSBC rose into ‘expansionary’ territory, October-through- December, having endured ‘contracting’ conditions previously. Brazil: Total Oil Product Demand 2,200 2,400 2,600 2,800 3,000 3,200 Jan Apr Jul Oct Jan kb/d Range 2007-2011 5-year avg 2011 2012 Saudi Arabia: Other Products Demand 200 400 600 800 1,000 Jan Apr Jul Oct Jan kb/d Range 2007-2011 5-year avg 2011 2012 DEMAND INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT 10 18 JANUARY 2013 Saudi Arabia Strong ‘other product’ demand growth underpinned Saudi Arabian consumption of 3.1 mb/d in October, a 305 kb/d (or 10.8%) increase on the year. That revised October estimate was 95 kb/d higher than forecast in last month’s report. Demand for ‘other products’, notably crude oil in the power sector, expanded by 215 kb/d on the year earlier, to 730 kb/d. Large gains were also seen in demand for gasoline (+55 kb/d, to 490 kb/d) and gasoil (+40 kb/d, to 695 kb/d). Stronger-than-anticipated October demand growth led us to revise higher our 4Q12 forecast by 35 kb/d over last month’s Report, to 3.0 mb/d, lifting the overall 2012 forecast by a more modest 10 kb/d to 3.0 mb/d – a gain of 165 kb/d on the year earlier. A deceleration to 125 kb/d is foreseen in 2013, as economic growth eases. Saudi Arabia maintained its traditionally sharply falling October trend, with consumption down by 8% on the month earlier, in contrast to the 10.8% y-o-y gain. Germany Having endured a topsy-turvy year through most of 2012, the German demand trend has strengthened somewhat in recent months, breaking back into y-o-y growth territory in October and November. October’s 0.1% gain saw consumption average out at around 2.5 mb/d. Rebounding naphtha and gasoil demand underpinned the trend, rising by 13.8% and 1.0% in October and 31.6% and 1.2% in November, respectively. For the year as a whole demand is projected at 2.35 mb/d, equating to a decline rate of 2.1% y-o-y, with a further reduction of 1% forecast in 2013, to 2.33 mb/d, as economic conditions remain under pressure. German: Total Oil Product Demand 2,100 2,300 2,500 2,700 2,900 Jan Apr Jul Oct Jan kb/d Range 07-11 5-year avg 2011 2012 German: Gasoil Demand 800 1,000 1,200 1,400 Jan Apr Jul Oct Jan kb/d Range 07-11 5-year avg 2011 2012 Canada Canadian oil demand grew by 90 kb/d or 4% to 2.3 mb/d in October, extending earlier gains, albeit at a more moderate pace. The Canadian economy continues, at least for now, to shrug off the recessionary trend that has bedevilled many other OECD countries. Momentum has moderated, however, compared to September’s 115 kb/d expansion or the recent peak of 180 kb/d achieved in May, as manufacturing sentiment has slipped. Canada: Total Oil Product Demand 2,000 2,100 2,200 2,300 2,400 2,500 2,600 Jan Apr Jul Oct Jan kb/d Range 07-11 5-year avg 2011 2012 Canadian Manufacturing PMI 49 50 51 52 53 54 55 Feb12 May12 Aug12 Nov12 Not e: 50=cont r act ion/ expansion t hreshold. Sour ces: RBC, Markit [...]... 2013 31 OECD S TOCKS I NTERNATIONAL E NERGY A GENCY - O IL M ARKET R EPORT Revisions versus 12 December 2012 Oil Market Report (million barrels) Americas Europe Asia Oceania OECD Sep-12 Crude Oil Gasoline Middle Distillates Residual Fuel Oil Other Products Total Products 1 Other Oils Total Oil Oct-12 Sep-12 Oct-12 Sep-12 Oct-12 Sep-12 Oct-12 1.0 -0.2 0.9 0.7 1.2 2.6 -0.6 3.0 -2.5 -2.8 -0.3 0.1 5.3... have carried through the 2013 forecast Because of these new field additions we have raised 2013 output by 40 kb/d to 2.8 mb/d, a 90 kb/d annual decline from 2012 18 J ANUARY 2013 21 S UPPLY I NTERNATIONAL E NERGY A GENCY - O IL M ARKET R EPORT Up Against the Export Wall: Hurdles to US LTO Production Growth Anybody with even a remote understanding of North American crude oil markets has become aware... commonly understood It is widely known that US light, tight oil (LTO) and Canadian oil sands which taken together account for the bulk of forecast North American production growth for 2013 and beyond – lack transport access to some growing markets which has kept their prices artificially depressed A continued ‘disconnect’ between high-growth LTO and oil sands streams and international benchmarks could theoretically... central processing facilities and an FPSO mb/d 4.4 Indian Oil Supply mb/d 1.00 Chinese Oil Supply 0.95 4.2 0.90 4.0 0.85 0.80 3.8 0.75 3.6 0.70 Jan Mar May 2009 2011 2012 forecast Jul Sep Nov Jan 2010 2012 2013 forecast Jan Mar May 2009 2011 2012 forecast Jul Sep Nov Jan 2010 2012 2013 forecast India – November preliminary: After an unexplained lull in reporting in October, the latest Indian production statistics... gas off the Mexican market, equivalent to around 300 kb/d of oil products Of course, not all of the shortfall was accounted for by oil products, but a very substantial fillip was seen This replacement demand fell away in November, and we will likely see Mexico fall below the Top-10 ranking in next months report, as average consumption declined exactly in line with last month’s report to 2.18 mb/d (from... November mb China Monthly Oil Stock Change* 20 Source: China Oil, Gas & Petrochemicals 15 10 mb Singapore Weekly Residue Stocks 30 25 5 20 0 (5) 15 (10) Source: International Enterprise (15) Jan 12 Mar 12 May 12 Jul 12 Sep 12 Nov 12 Crude Gasoline Gasoil Kerosene *Since August 2010, COGP only reports percentage stock change 10 Jan Apr Jul Range 2008-2012 Oct 5-yr Average 2012 2013 Data from International... that European demand will fall by a further 1.7% in 2013, to 13.6 mb/d OECD Europe: Total Oil Product Demand m b/d 16.5 16.0 15.5 15.0 14.5 14.0 13.5 13.0 8.1% OECD Europe: Total Demand 10.4% by Product, 2012 12.1% 6.7% LPG Naphtha 8.6% Gasoline Jet/Kero Diesel Jan Apr Range 07-11 2011 Jul Oct Jan 5-year avg 2012 14.3% 31.2% 8.7% Heating Oil Fuel Oil Other Asia Oceania Asia Oceania continues to lead... Non-OPEC Oil Supply mb/d Year-on-Year Change 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 OPEC Crude OPEC NGLs Non-OPEC Total Supply mb/d OPEC and Non-OPEC Oil Supply mb/d 32.0 31.5 31.0 30.5 30.0 29.5 29.0 28.5 28.0 62 60 58 56 54 52 50 Jan 12 Jul 12 Jan 13 Non-OPEC OPEC Crude - RS Jul 13 OPEC NGLs All world oil supply figures for December discussed in this report. .. more to follow over the course of 2013 Already, WTI prices have started to firm versus Brent But the debottlenecking of transport capacity within North America and especially within the US may not in and of itself spell the end of LTO’s market troubles That is because of the North American refining market s ultimately limited appetite for incremental light, sweet oil supply While new pipeline links,... North Slope oil, unless there has been a national interest determination to the contrary • Exports of California heavy crude oil, up to 25 kb/d • Exports in connection with refining or exchange of oil in strategic reserves • Exports that are consistent with findings made by the President under an applicable statute Alaskan North Slope crude does not require a license Domestically produced crude oil, transported . AGENCY - OIL MARKET REPORT 6 18 JANUARY 2013 Top-10 Oil Consumers (thousand barrels per day) Oct-12 2012 2013 Oct-12 2012 2013 Oct-12 2012 2013 US50. - OIL MARKET REPORT DEMAND 18 JANUARY 2013 5 Global Oil Demand Growth 2011/2012 /2013 thousand barrels per day ( mb/d ) 2011 0.84 1.0% 2012 0.98 1.1% 2013