Issue 30

Authors: OIES,

OIES Oil Monthly – Issue 30

The new issue of OIES Oil Monthly, including our latest short-term oil market outlook to 2024, is now available.

– We have reduced our Brent forecast $0.8/b to $82.6/b in 2023 and $1.8/b to $82.3/b in 2024, from $83.4/b and $84.1/b forecast last month. We have lowered our Brent price outlook in 4Q23 by $3.2/b to $84/b from $87.3/b previously, as expectations of a large deficit in 4Q23 moderated due to a robust non-OPEC supply performance. For 2024, the price outlook is pushed lower by $1.8/b to $82.3/b with Brent prices expected to rebound to $83.3/b in Q1 supported by the deeper OPEC+ cuts but to remain confined in the $80s in the following two quarters. Overall, we expect Brent’s $75-85/b range seen in 2023 to hold into next year.

– The extension and deepening of OPEC+ voluntary cuts in 1Q24 have pushed balances into a deficit, prompting us to project a 350 kb/d deficit in Q1 versus last month’s 670 kb/d surplus. The oil market is now forecast near balance in 2024 at a small 130 kb/d deficit, from a 570 kb/d surplus forecast previously. Assuming a gradual phase-out of the 1.7 mb/d OPEC+ cuts in Q2, we forecast the oil market to remain in a 230 kb/d deficit in Q2, before progressively returning near balance in Q3 and building to a small 100 kb/d surplus in Q4. This implies that OECD commercial stocks will be capped in the year ahead.

– We have raised our global oil demand growth forecast 220 kb/d to 1.4 mb/d in 2024, after 2.1 mb/d this year. Our improved forecast reflects the easing of downside risks to the growth outlook, with forecast gains mainly concentrated in non-OECD. Overall, despite global demand growth forecast to slow in 2024, this will still amount to non-OECD demand growth normalizing to the 2010-19 average (1.4 mb/d), while OECD growth falls short and drags global demand growth 140 kb/d below the pre-COVID historical average.

– Global oil supply is forecast to grow by 1.3 mb/d in 2024 from 1.5 mb/d in 2023, 500 kb/d lower than our previous forecast. The 2024 downgrade reflects the extension and deepening of OPEC+ voluntary cuts in 1Q24, prompting us to lower OPEC-10 crude production growth by 560 kb/d to -210 kb/d. The non-OPEC crude supply growth outlook is little changed at 940 kb/d, with forecast US and Brazil gains offsetting downgrades elsewhere.

– The balance of risks is skewed to the upside from Q2. Risks to the reference price forecast are tilted to the downside at the start of 2024 dominated by negative demand pressures and/or patchy OPEC+ compliance, but upside potential returns from Q2 onwards on central banks and OPEC+ potential policy actions.