OIES Oil Monthly – Issue 24
The new issue of OIES Oil Monthly, including our latest short-term oil market outlook to 2024, is now available.
– Our forecast for global oil demand growth remains roughly unchanged at 1.6 mb/d in 2023 and 1.7 mb/d in 2024. China’s stronger than anticipated turnaround in Q1 buoyed non-OECD growth for 2023 to 1.5 mb/d, from 1.3 mb/d last month, offsetting softer OECD growth which is halved to 140 kb/d from 300 kb/d. The downgrade of OECD growth this month is entirely led by downward revisions in US demand, which we expect to marginally contract by 84 kb/d in 2023 before returning to 185 kb/d growth in 2024. We have revised upwards China’s oil demand growth in 2023 by 140 kb/d to 790 kb/d on the strong Q1 actuals, but our H2 forecast continues to err on the side of caution as China’s economic recovery remains uneven. India’s robust macro performance and higher intake of cheap Russian crude continue to support the 2023 demand outlook, leading to a small y/y uptick to 250 kb/d from 210 kb/d previously. In terms of products, jet fuel demand growth is further upgraded in 2023 by 110 kb/d to 1 mb/d, accounting for around 60% of total gains, as the Q1 weakness in LPG demand led to a 150 kb/d downgrade for the year.
– We have upgraded our global oil supply outlook by 130 kb/d to 1.5 mb/d in 2023 and by 170 kb/d to 2 mb/d in 2024. Non-OPEC growth in H1 2023 is lifted by 210 kb/d, although it is expected to soften after Q2. We have slightly downgraded US crude supply by 40 kb/d in both 2023 and 2024 to 660 kb/d and 360 kb/d y/y, respectively. OPEC crude production fell m/m in April by 240 kb/d on disruptions from Iraq and Nigeria, ahead of the planned May voluntary cuts. This has pushed total OPEC+ underproduction to its highest since November 2022, at 2.4 mb/d below quota, and we forecast another 890 kb/d decline m/m in May, as crude exports from the eight producers enacting the cuts have already seen a hefty decline in the first two weeks of the month. OPEC crude output is projected to contract by 430 kb/d in 2023.
– Our Reference forecast for Brent is $84.6/b in 2023 and $86.0/b in 2024. The Brent Prospect stands at $83.7/b in 2023 and $84.0/b in 2024, $0.8/b and $2.0/b below our reference. The balance of price risks is further skewed to the downside this month, particularly in 2024 standing at -$7.8/b, as the low-end of the price band widened by around $5/b in both years to range between $75.3/b and $91.5/b in 2023 and between $61.0/b and $103.2/b in 2024. Pressures arising from less optimistic global growth prospects are cutting the reference outlook by -$4/b in 2023 and -$11.5/b in 2024.
– The oil market balance is forecast at a -0.2 mb/d deficit in 2023 and 0.1 mb/d surplus in 2024. We maintain our forecast of a small -210 kb/d deficit in 2023, relatively unchanged from last month, but we have revised upwards the balance in 2024 by 240 kb/d to a small 100 kb/d surplus. The supply/demand gap however remains near balance in both years, with the focus starting to shift to 2024 balances as supply/demand prospects have weakened and the gap on balance has grown to a 500 kb/d surplus.