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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 2024, which could exert downward pressure on oil prices, assuming geopolitical tensions remain contained.

by Fay Chen // 31 October, 2023

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