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OPEC Reference Basket in April 2013

Source: OPEC 5/23/2013, Location: Europe

The OPEC Reference Basket (ORB) dipped by more than 5% for the second month in a row in April. However, it continued to average above $100/b, supported by the lesser decline in Oman/Dubai-related crudes. Cumulative losses in the value of the Basket in March and April amounted to more than $11 or 11% from the highest price this year, which was around $112/b in February. Similar to the previous month, the value of the Basket reflected the bearish sentiment in the international crude oil market, magnified by speculative activity, which continues to weaken outright prices by record levels. Several key factors continue to pressure crude oil prices, including weak economic data from the world's two largest oil consumers, the United States and China, which necessitated a cut in this year’s oil demand forecasts by major energy agencies. Additionally, ongoing Euro-zone economic turmoil and record levels of US crude oil inventories have contributed greatly to the downturn in crude oil prices.

On a monthly basis, the OPEC Reference Basket in April dropped to average $101.05/b, slipping by $5.39 or 5.06% over the previous month. Year-to-date, the Basket averaged $107.28/b, a decline of $10.22/b or 8.7% from the same period last year.

In April, all Basket component values weakened between 3.6% and 5.7% compared to the previous month. Apart from Bonny Light, which was supported by higher Asian demand amid lower availability, Dated Brent-related crudes faced downward pressure from the ample supply of regional light sweet crudes and lower refinery consumption. Saharan Blend, Es Sider, Girassol and Bonny Light dropped by 5.3% to an average of $103.55/b, down by $5.77. These grades continue to be affected by the overall sharp deterioration in the North Sea Brent market relative to US WTI and Middle Eastern Oman/Dubai.

With the return of Asian refinery demand after a substantial maintenance period, the Oman/Dubai market performed a bit better than other crude oil markets. This was reflected in the value of the Basket components priced in this market, since their values declined the least, despite record downward adjustments for official crude oil pricing formulae to Asia for March and April loadings. Qatar Marine and Murban crudes decreased by 3.6% or $3.90/b over the month of April to average $103.01/b. Multi-destination grades which also lost ground, include Iran Heavy, Basrah Light, Kuwait Export and Arab Light, which, on average, weakened by $5.61 or 5.3% to a penny short of $100/b, reaching $99.99/b for the first time in nine months. Reflecting the strong m-o-m drop due to formula differential adjustments for the US Gulf Coast (USGC) physical market, Latin American grades, including Ecuador’s Oriente and Venezuela’s Merey, decreased by $5.01 or 5% to a monthly average of $94.70/b, below $100 for the second month in a row.

On 9 May, the OPEC Reference Basket stood at $101.67/b.

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