Global product markets weekly: margins fall as OPEC and company agree to cut production

Crude prices finally rose in the week commencing December 3rd, with North Sea Dated up $1.70/bbl to average $60.40/bbl. This was the benchmark’s first weekly increase since September. Crude prices were supported as OPEC and allies struck a mid-week agreement to restrict output by 1.2 million b/d. The Buzzard field also saw an outage, which boosted Forties, a key North Sea blend. Additionally, in the face of extreme discounts, the Canadian province of Alberta announced that a production cut will be mandated effective January 2019, serving to tighten the already stressed heavy market. Our 2019 price forecast has the benchmark crude price averaging $65.60/bbl. The global composite refinery margin again fell, primarily on the back of rising crude prices. Middle distillates, the banner product group for refiners this year, have surprisingly weakened in the last few weeks.