Oil Products: Prices To Move Downwards From 2012 Peaks
As Brent partially recovered and WTI climbed steadily upward in recent months, oil product prices have also partially rebounded, though we still see weakness in naphtha and bunker fuel prices in particular. We maintain our view that as a result of lower Brent prices and relatively muted demand, oil product prices will average lower in 2013 than in 2012. In the longer term, downward pressure on product prices are likely to persist - a result of our forecast for crude prices to average lower from 2014 to 2017, a comfortable supply-demand picture in downstream production and consumption, and more importantly, weak demand in oil-based products. Nonetheless, despite the downtrend from 2012 peaks, crude prices in the US$90-100 per barrel range should keep oil product prices at historically elevated levels.
Our refined products forecasts methodology is based on estimating the future spreads between each product - gasoline, gasoil/diesel, naphtha, jet fuel/kerosene, bunker fuel 180 and 380 - and its regional benchmark: WTI for products sold at New York, Brent for Rotterdam and Dubai for Singapore. Therefore, changes in crude prices (and our crude price forecasts) will automatically trigger movements in our forecasts for oil product prices.
|Brent Makes Mild Recovery, WTI Bounces Right Up|
|Front Month Price Of Brent & WTI, January - Present (US$/bbl)|