Global product markets weekly update: margins flat as Brent rises again

Crude prices substantially firmed during the week commencing 07 January 2019. The OPEC + agreement has provided support to the market, while the demand side has received some positive signals regarding the US China trade relationship. However, there is a great deal of uncertainty surrounding the Trump Administration’s trade policies, so the market will likely react with some volatility on each small development. Key uncertainties in the OPEC + agreement include Libya and Iran. Libya production dipped below 1 million b/d last month, and Iran could see a modest recovery in production, although they still face US sanctions. The US Administration is on course to end waivers in a few months to key Iranian buyers, which could certainly provide additional upside to global oil prices. Our base case forecast has the global crude benchmark averaging $62.30/bbl in Q1, with the production cuts providing the majority of support.