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OPEC Reference Basket in February 2013

Source: OPEC 2/27/2012, Location: Europe

The OPEC Reference Basket rose by more than 2.5% in January to settle at $109.28/b, the highest monthly average since September of the previous year. The increase in the Basket was supported by restored optimism about the state of the world economy, after strong data from major economies boosted the outlook for oil demand and lifted global oil prices.

Financial optimism coupled with geopolitical concerns spurred a large wave of speculative buying in the oil futures market, helping accelerate the price move upward. Oil prices were further supported by rising world stock markets, a weaker US dollar, healthy refined product markets, and enthusiasm about the increased flow of the US Mid-continent crude to the US Gulf Coast (USGC) which was achieved by the startup of the Seaway pipeline expansion.

On a monthly basis, the OPEC Reference Basket increased to an average of $109.28/b in January, improving $2.73 or 2.6% over the previous month. However, the Basket was $2.48 or 2.2% below the level in the same period last year when prices averaged $111.76/b.

All Basket components improved in January with Venezuelan Merey grades showing the most significant increase amid improving pricing formula elements, notably the sharp rebound in WTS spreads, as well as outright WTI prices. Merey increased by $5.31 or almost 6% over the month.

Brent-related components also fared well supported by the healthy Atlantic Basin light distillates market which improved amid consecutive US refined product inventory draws, news of continued US East Coast refinery closures and a snap of cold weather. Saharan Blend, Es Sider, Girassol, and Bonny Light improved by 3.5% to average $113.72/b, an increase of $3.90/b. Multidestination grades showed the next important gain, amid noticeably better global performance of benchmark crudes at these grade ranges, particularly the medium/heavy sour market in the Mediterranean.

These grades – including Iran Heavy, Basrah Light, Kuwait Export, and Arab Light – improved on average by $2.20 or 2.1%. Middle Eastern Qatar Marine and Murban achieved less with decelerating Northern Asian demand as planned spring refinery maintenance approached and expectations of warmer weather after February. The low demand has also dragged down the Dubai market structure to near contango for the first time since August, despite the upcoming over 1 mb/d expansion in refining capacity in Asia. Nevertheless, these grades increased by 1.5%, or $1.56, over the month of January. Ecuador’s Oriente registered an increase at $2.71, or 2.75%, to stand at a monthly average of $101.39/b.

On 11 February, the OPEC Reference Basket stood at $114.36/b, $5.08 above January’s average.

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