Global product markets weekly: margins start year off slow as middle distillates weaken

Crude prices slightly recovered from their recent freefall during the week commencing 31 December 2018, with North Sea Dated rising $3.30/bbl to average $54.30/bbl for the week. Prices were supported by the beginning phases of the OPEC/Non-OPEC production cut agreement, with Saudi Arabian supply numbers showing a notable cut and other players such as Algeria and Iraq signalling their willingness to comply. Although crude prices are still risked due to surging US production, most of the recent downward trend was tied to demand concerns. Global growth seems to be dwindling, with recent reports emerging showing a slowdown in manufacturing in Germany and China, key benchmarks for EU and Asia-Pacific industrial activity. Our base case forecast has the global crude benchmark averaging $62.30/bbl in Q1, with the production cuts providing the majority of support.