Issue 28

Authors: OIES,

OIES Oil Monthly – Issue 28

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 $1.2/b to $85.3/b from $84.1/b while maintaining the 2024 forecast at $86.6/b. Market fundamentals remain tight as robust global demand growth combines with extra Saudi and Russian supply cuts that will remain in effect at least till year-end, keeping pressure on stocks for the remainder of this year and early next. This has prompted us to raise our Brent forecast for 4Q23 and 1Q24 to $94.6/b and $90.1/b respectively, before pressures ease in the remainder of next year and prices fall back in the $80-90/b range.

– We have revised the 2023 deficit down to 230 kb/d from 540 kb/d due to base adjustments, but we still project large H2 deficits of -880 kb/d in Q3 and -1.2 mb/d in Q4. For 2024, balances continue to show a marginal 50 kb/d under-supply in Q1 before gradually loosening to a 60 kb/d surplus in the remainder of the year as higher supplies catch-up with a slower paced global demand growth. OECD stocks are projected to remain under pressure well into H1 2024.

– We maintain our forecasts for global oil demand growth of 2 mb/d in 2023 and 1.2 mb/d in 2024. Our demand growth outlook for 4Q23 and 1Q24 has improved to 1.8 mb/d and 1.6 mb/d respectively, driven on improvements in the non-OECD outlook. Despite that, global demand growth is projected to moderate over the remainder of 2024 at 1.1 mb/d.

– We have raised our global supply growth forecast by 200 kb/d to 1.5 mb/d in 2023, underpinned by non-OPEC revisions, but downgraded supply growth by 210 kb/d to 1.5 mb/d in 2024. Non-OPEC crude growth is upgraded 190 kb/d to 1.4 mb/d in 2023 with the US growth of 820 kb/d accounting for the bulk of the increase. OPEC crude in 2023 is forecast to contract 540 kb/d as Saudi Arabia maintains its extra output cut at least till year-end and combined output from the exempt OPEC-3 reached its highest level since 4Q18, limiting any further potential upside. This has led us to scale back OPEC crude growth in 2024 by 190 kb/d to 430 kb/d.

– We have revised the balance of risks lower in 4Q23 amid demand side pressures, while price risks in 2024 remain skewed to the upside. Scenarios of a delayed reversal of the rate hiking cycle have prompted us to shift the 4Q23 balance of risks to the downside. But less visibility over Saudi output policy in 2024 exerts upward pressure to the balance in H1, outweighing demand pressures and shifting price risks to the upside.