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Oil Market Snapshot November 2023

  • The price risk premium has diminished with Brent dropping back to around $80/bbl as the Israel-Hamas conflict is limited within the Gaza strip for now. Higher than expected US oil production, inventory builds, and China’s economic slowdown have all added downward pressure on prices.
  • The market awaits the postponed OPEC+ meeting at the end of month, delayed by disagreements on African quotas for next year. Analysts anticipate an extension of the current cut agreement into next year, with the possibility of further cuts to support prices.
  • The IEA has revised its global demand forecast up by 100,000 b/d to grow by 2.37 mb/d this year similar to our growth forecast of 1.41 mb/d and edging closer to OPEC’s forecasted 2.45 mb/d growth. OECD is driving the growth with China contributing the most as a result of the expansion of petrochemical industry and the continued recovery of travel industry.
  • Demand growth for 2024 is expected to slow to 1.52 mb/d, reflecting China’s economic slowdown.
  • Our forecast sees global production to grow 1.48 mb/d in 2023, all from non-OPEC countries. US LTO outperforming expectations with production expected to grow an average 790,000 b/d in 2023. 2024 will see production grow by 1.44 mb/d.
  • The combination of a weakening demand outlook and ongoing production growth from non-OPEC countries, sanction lift on Venezuela and continued growth from Iran could lead to a market surplus.
  • Deepwater E&P remains active with 18 projects brought onstream including four in US GoM and three mega projects in Latin America this year.

by Fay Chen // 27 November, 2023

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