OIES Oil Monthly – Issue 25
The new issue of OIES Oil Monthly, including our latest short-term oil market outlook to 2024, is now available.
– We reduced our Reference forecast for Brent by $2.5/b to $82.1/b in 2023, from $84.6/b forecast last month. The outlook now reflects higher macro risks which will continue to temper price gains despite the market falling into a deeper deficit in H2, before gaining momentum in Q4 as the OPEC+ cuts play out amid tighter stocks. For 2024, we adjusted our Brent forecast higher by $1.2/b to $87.2/b, as lower OPEC+ supplies after the new deal address a weaker global oil demand outlook and an upgrade in projected non-OPEC supplies.
– The oil market balance is forecast at -490 kb/d and -180 kb/d deficit in 2023 and 2024, respectively, which implies global stock draws. Following the new OPEC+ deal, the previously expected -1.17 mb/d deficit in Q3 2023 deepens by -190 kb/d to -1.36 mb/d led by Saudi Arabia’s additional 1 mb/d voluntary cut in July, but the projected -290 kb/d downgrade of global oil demand in H2 offsets lower supplies in the second half of the year (-320 kb/d) and slightly reduces the deficit in Q4 to -860 kb/d from -980 kb/d forecast last month. For 2024, the global balance tightens by -280 kb/d compared to last month, flipping into deficit from a previously projected small 100 kb/d surplus, as the -590 kb/d downgrade in global supply due to the extension of OPEC+ voluntary cuts under the new deal is confronted by a -300 kb/d downward revision in global oil demand on softening growth.
– We forecast global oil demand will grow by 1.7 mb/d in 2023, up 50 kb/d from last month, but downgraded 2024 growth by -350 kb/d to 1.4 mb/d in 2024. Stronger demand growth y/y in H1 2023 up 380 kb/d to 1.7 mb/d from 1.4 mb/d previously expected prompted the 2023 upgrade. The frontloaded demand strength in H1 will however temper growth in H2 and beyond, leading us to downgrade our growth forecast for global oil demand -280 kb/d to 1.6 mb/d y/y in H2 2023 and -350 kb/d to 1.4 mb/d in 2024.
– Global oil supply is forecast to grow 1.3 mb/d in 2023, 220 kb/d lower than last month’s forecast and is downgraded -340 kb/d to 1.7 mb/d in 2024. Supply downgrades this month are driven primarily by lowering OPEC crude growth -50 kb/d to -480 kb/d in 2023 and -510 kb/d to 390 kb/d in 2024, following the new OPEC+ deal and Saudi Arabia’s additional 1 mb/d voluntary cut in July, on top of the existing 500 kb/d voluntary cut since May. Outside OPEC+, our non-OPEC and other liquids supply growth forecasts for 2024 turn more positive by 160 kb/d to 1.3 mb/d.