OIES Oil Monthly – Issue 29
The new issue of OIES Oil Monthly, including our latest short-term oil market outlook to 2024, is now available.
– We have reduced our 2023 Brent forecast $1.8/b to $83.4/b in 2023 and $2.5/b to $84.1/b in 2024, from $85.3/b and $86.6/b forecast last month. Brent in October reversed the 9% hike from September falling to $91.1/b from $94.0/b (-3% m/m), before extending its losses in the w/c Nov. 6 to $81.6/b. This is the lowest since July with large liquidation of long positions in paper markets amplifying the downside. In 2024, the price outlook is pushed lower by $2.5/b keeping Brent prices pinned in the $80-90/b range, conditional to no-change in OPEC+ output policy for 2024 after the upcoming Ministerial Meeting on Nov. 26.
– The oil market balance is forecast at a surplus in both 2023 and 2024 at 160 kb/d and 590 kb/d respectively. We have lowered the 4Q23 deficit by 770 kb/d to -410 kb/d, from -1.2 mb/d forecast last month, on weaker OECD demand amplified by base adjustments in historical US demand data confronted by higher-than-expected OPEC+ supplies. For 2024, the oil market is now expected to flip into surpluses from Q1-onwards, as global supply grows at a similar rate to this year while global demand growth softens. OECD stocks are projected to build closer to their 5-year average in 2024 and break above the average by year-end.
– Our forecast for global oil demand growth remains unchanged at 2 mb/d in 2023 and 1.2 mb/d in 2024. We have scaled back global demand growth by 260 kb/d to 1.6 mb/d in 4Q23 and by 360 kb/d to 1.2 mb/d in 1Q24 with the downgrades concentrated in the OECD, offsetting last month’s upgrades to the non-OECD outlook in the same period that remains relatively unchanged. For 2024, non-OECD demand growth is still expected to soften to 1.2 mb/d from 1.9 mb/d in 2023 as rebound effects fade.
– We have raised our global supply growth outlook in both 2023 and 2024 to 1.6 mb/d, 120 kb/d and 130 kb/d above last month’s forecast. Higher-than-anticipated OPEC+ output confronted by resilient US production has prompted us to raise our global supply growth outlook by 270 kb/d to 130 kb/d in 4Q23 and by 220 kb/d to 420 kb/d in 1Q24, followed by small upgrades in 2024, mainly for Venezuela, Kazakhstan and Russia.
– The balance of risks tilts to the upside in 4Q23 on geopolitics, but price risks move closer to balance again in 2024. Geopolitical pressures around the Israel conflict and a rise in precautionary demand, have lifted the balance of price risks in the near-term, before shifting again near balance in 2024.