OIES Oil Monthly – Issue 27
The new issue of OIES Oil Monthly, including our latest short-term oil market outlook to 2024, is now available.
– We have upgraded our 2023 Brent forecast $2.6/b to $84.1/b from $81.5/b while leaving the 2024 forecast little changed at $86.8/b. The upgrade was driven by Saudi and Russian extensions to their additional voluntary supply cuts till year-end; solid global oil demand growth despite ongoing macro risks; and accelerating stock draws. These have prompted us to raise our H2 Brent price outlook by $5.1/b to $88.3/b. Prices breaking through to the $90s in early-September brings Brent closer to its upper bound which averages $94.6/b for the remainder of 2023.
– We have revised the H2 deficit deeper by 360 kb/d to 1.53 mb/d and we now forecast tighter market balances in 2023 by -210 kb/d to a 540 kb/d deficit relative to our previous forecast. For 2024, we have adjusted the expected deficit slightly lower by 60 kb/d to 110 kb/d, assuming the reversal of the Saudi additional voluntary cuts over Q1. OECD stocks are projected to remain 100-150 mbbls below the 5-year average for the remainder of 2023 and for most of 2024.
– Global oil demand growth is upgraded 130 kb/d to 2.1 mb/d in 2023 on stronger H1 actuals that boosted y/y growth to 2.2 mb/d and we still expect growth to ease but remain solid at 1.9 mb/d in H2. China and US accounted for the largest demand growth upgrades in 2023, as Europe, APAC and other non-OECD Asia dragged.
– Global oil supply in H2 is now projected to contract 230 kb/d y/y for the first time since H1 2021 on the coordinated Saudi and Russian extensions of their additional supply cuts till year-end amid faltering crude growth elsewhere. Global oil supply in 2023 as a whole is forecast to grow 1.3 mb/d, led by non-OPEC at 1.2 mb/d and non-crude supply growth of 630 kb/d, offset by a 520 kb/d contraction in OPEC crude.
– Price risks to the outlook are balanced in the remainder of 2023, but the balance of risks has now shifted to the upside in 2024. More visibility on OPEC+ output policy for the remainder of 2023 eliminated the supply risks in the year, with geopolitical risks downplayed by the availability of OPEC spare capacity. Demand-side risks remain unresolved but improved.