Oil Market Snapshot – October 2023

  • The Israel-Hamas conflict and heightened geopolitical tensions initially raised oil prices by over $5/bbl but later dropped below $90/bbl due to concerns about a slowing global economy outweighing the war risk premium.
  • The US lifting sanctions on Venezuela, releasing 200,000 b/d into the market, exerted downward pressure on prices.
  • The worsening Chinese property sector's debt crisis could impact the financial system and impact the already weak economy. IMF revised China’s GDP growth down for both 2023 and 2024.
  • Despite weaker economy, Chinese oil demand rebound strongly, growing 1.96 mb/d this year, almost 80% of world total growth of 2.48 mb/d driven by rebound in travelling and industry, and petrochemical expansion.
  • However, demand growth for 2024 is expected to slow to 1.48 mb/d as a result of slower Chinese and global economies.
  • US LTO production grew 790,000 b/d January to July y-o-y, outperforming estimates. The revised forecast sees global production to grow 1.48 mb/d in 2023, all from non-OPEC countries.
  • If Saudi Arabia adds more barrels from next year, the market may face a surplus in 202...

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Oil Market Snapshot – September 2023

  • Brent is rising above $90/bbl due to supply constraints, with Saudi Arabia and Russia extending their voluntary cuts of 1.3 mb/d until year-end, and global demand is on the rise.  Russian diesel ban contributes to global fuel and oil price surge. Brent currently trading at $93/bbl. Central banks’ unchanged rates have limited price impact.
  • The EIA projects Brent to average $93/bbl in Q423, and major investment banks like Barclays, Goldman Sachs, Citi, and UBS have raised their forecasts to above $90/bbl, with some even reaching $100/bbl.
  • Hawkish central banks, geopolitical risks, and trade tensions may increase oil price volatility.
  • Anticipated demand growth for this year is around 2.28 mb/d, with China contributing 1.65 mb/d and strong Indian demand.
  • Supply stress is exacerbated by outages in Libya, China, Kazakhstan, a decline in Angola, and reduced seasonal biofuel production.
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Oil Market Snapshot – June 2023

  • Price volatility has continued this year, since the beginning of June initially rising to $78/bbl from a low of $72/bbl following the US government debt ceiling agreement and OPEC+ meeting with Saudi Arabia committing to extra production cuts, but fell back to $76/bbl as concerns over weaker global economy and oil demand growth overshadowing production cuts from OPEC.
  • US commercial crude inventory saw a small draw of 452,000 bbls, but there was a build in product inventories, including a 2.7 million bbls gasoline stockpile, indicating a slow pickup in US demand.
  • Global liquid demand is projected to exceed 2019 levels, reaching 102 mb/d with a growth of 2 mb/d this year, driven primarily by non-OECD countries, particularly China.
  • Despite slow economic recovery, Chinese demand is expected to grow 7.4% y-o-y as it rises from a low base after a 320,000 b/d reduction in 2022. Recovery in travel is driving fuel demand growth.
  • Russia has shown some signs of cutting production in May, but their full commitment to the pledged 500,000 b/d cut is yet to be seen.
  • ...

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Oil Market Snapshot – April 2023

  • Brent is trading at c. $84/bbl after a surprise “voluntary” quota cut by some OPEC+ members, $4/bbl higher than last week.
  • Prior to the cuts, EIA forecast average Brent of $82.95/bbl in 2023. Price volatility is likely to be fuelled by the cuts, which come shortly after Saudi Arabia said pre-existing quotas would last to YE23.
  • We see global oil demand growth of 1.81 million b/d in 2023 (+40,000 b/d on previous), with a slower recovery in China and higher prices being key risks to demand growth.
  • The quota cuts may support inflation, leading central banks to further rate rises, potentially slowing the global economy.
  • Global production growth is forecast to be 1.05 million b/d in 2023, all from non-OPEC+ countries.
  • We expect OPEC supply to decline by 440,000 b/d in 2023, including the voluntary cuts.
  • Rising costs risk upstream project delays, slowing long term supply growth and potentially setting up a supply crunch.
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Oil Market Snapshot – March 2023

  • Brent is trading c. $85/bbl, up $3/bbl m-o-m, with prices volatile above $80/bbl as the market tries to make sense of an array of supply and demand risks
  • We see global demand growth of 1.77 million b/d in 2023 (+240,000 b/d on previous), with the OECD subdued by inflation as US demand appears to wane slightly in the latest data
  • China’s reopening once again drives demand growth, but the size and speed still remains uncertain, as does OECD interest rate policy
  • We forecast global production growth of 1.44 million b/d in 2023 (+240,000 b/d on previous) with the US the main contributor
  • Brazil, Norway, Canada, Guyana and China all grow, but are balanced by Russia’s estimated 900,000 b/d loss to sanctions and price caps
  • The threshold for a Saudi response to a price spike appears high after comments by the energy minister, likely requiring intervention from all major consuming nations, i.e., China, the US, the EU
  • We provisionally see inventories drawing 150,000 b/d on average in 2023 (60,000 b/d larger than previous), but Russian and OPEC+ supply, OECD and Chinese demand are all uncertain
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Oil Market Snapshot – February 2023

  • Brent is trading c. $82/bbl, up $2/bbl m-o-m, with agencies raising their expectations of global GDP growth as inflation eases, the US remains robust, and China reopens
  • We see global demand growth of 1.53 million b/d in 2023 (+90,000 b/d on previous), driven by non-OECD growth, reflecting the improving economic outlook
  • Indian demand has remained strong, while we see China once again driving global demand as the year wears on
  • We forecast global production growth of 1.2 million b/d in 2023 (-430,000 b/d on previous forecast) with the majority coming from outside OPEC
  • OPEC adds just 270,000 b/d in 2023 if policies remain the same, down from 2.58 million b/d in 2022 when the 2020 cuts deal was unwound
  • The latest OPEC+ meeting left quotas unchanged, and the next will be in two months
  • Oil majors posted record profits in 2022, with shareholder returns top priority
  • We expect Russia’s crude sanctions losses to be limited to 900,000 b/d, with the price cap and sanctions broadly effective, though Russia will be able to claw back some lost revenue
  • We see inventories drawing 90,000 b/d ...

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Oil Market Snapshot – January 2023

  • The year begins with Brent dipping below $80/bbl, as recession fears continue and China’s abandonment of “zero COVID” has led to a wave of infections and hospitalisations
  • With the Russian invasion of Ukraine ongoing and global energy markets are still reacting, volatility remains likely in the year ahead, though perhaps less intense than in 2022
  • We see global demand growth of 2.19 million b/d in 2022 (unchanged on previous)
  • For 2023, we forecast demand growth of 1.44 million b/d (+50,000 b/d), lower than that in 2022 as high energy prices impacting economy and weakening demand
  • We peg 2022’s global production growth at 4.03 million b/d (-10,000 b/d on previous) based on revisions to OPEC+ output and maintenance losses in Canada, Kazakhstan and Norway
  • Global production growth falls to 1.63 million b/d in 2023 (+220,000 b/d on previous) with the majority coming from outside OPEC and Russian losses limited to 900,000 b/d
  • We see inventories building 110,000 b/d on average in 2022 (-10,000 on previous), and 300,000 b/d in 2023 (+160,000 b/d on previous)
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Oil Market Snapshot – December 2022

  • December begins with Brent trading c. $87/bbl, a full $11/bbl below the first week of November but off lows of $82/bbl after China appeared to signal some easing of COVID policies
  • Our global demand growth of 2.19 million b/d for 2022 (+70,000 b/d on previous), which would keep demand below 2019 levels for another year
  • The narrative remains one of a weakening economic outlook, notwithstanding indications that China’s zero COVID policy may well be relaxed over the coming months
  • The poor economic picture will be a factor when OPEC+ meets virtually on 4th December, with the most likely outcome no change to quotas
  • We estimate the previous meeting’s quotas will see OPEC’s November production will fall by c. 750,000 b/d
  • We forecast global supply growth of 4.04 million b/d in 2022 (-90,000 b/d on previous) based on revisions to OPEC+ output and maintenance losses in Canada, Kazakhstan and Norway
  • Growth falls to 1.41 million b/d in 2023 (+180,000 b/d on previous), revised higher as some projects expected in 2022 now fall into 2023’s data
  • With Saudi Arabia reaching its final capacity plate...

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Oil Market Snapshot – November 2022

  • The first week of November ends with Brent trading c. $98/bbl, up c. $5/bbl on a month ago after an OPEC+ quota cut of 2 million b/d
  • Our global demand growth of 2.12 million b/d for 2022 (unchanged on previous), which would keep demand below 2019 levels for another year
  • Concerns about global economic growth for 2023 are growing as energy high prices, Russia’s war in Ukraine and China’s economic issues all continue
  • The practical effect of the new OPEC+ quotas is a 1 million b/d cut to production from August levels, primarily from OPEC countries close to quota: Saudi Arabia, UAE, Kuwait and Iraq
  • We forecast global supply growth of 4.13 million b/d in 2022 (-310,000 b/d on previous) factoring in this cut and reductions in Russian and Kazakh output
  • Global supply growth falls to 1.23 million b/d in 2023 on OPEC+’s current quotas, as Russian exports decline from January in response to European sanctions
  • We see inventories building 510,000 b/d on average in 2022 (-100,000 on previous), and 30,000 b/d in 2023 (-450,000 b/d on previous) on current policies
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Oil Market Snapshot – October 2022

  • September ends with Brent trading c. $85/bbl, down c. $9/bbl on a month ago but rising against mid-month prices, as Russia calls up conscripts for its invasion of Ukraine
  • We forecast global demand growth of 2.12 million b/d for 2022 (-40,000 b/d on previous), which would keep demand below 2019 levels for another year • There are significant concerns about global economic growth for 2023 as high energy prices continue to bite
  • We forecast global supply growth of 4.44 million b/d in 2022 (+930,000 b/d on previous)
  • Losses to Russian production will be smaller than anticipated and fall mostly in 2023, as the EU puts its price cap negotiations on hold, though December will be 1 million b/d below January 2022
  • OPEC+ meet on 5th October expecting to cut, after Russia has proposed a 1 million b/d quota reduction
  • Any actual production cuts would have to come from those members meeting or almost meeting their quotas, i.e. primarily Gulf states such as Saudi Arabia and its allies
  • We see inventories building 610,000 b/d on average in 2022, and 480,000 b/d in 2023 on current policies. Changes to OPEC+ policy wo...

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