Opec leaves 2022 world oil demand growth estimate flat

Opec has left unchanged its world oil demand growth projections for 2022, near 4.2mn b/d, signalling the prospective impact of the Covid-19 Omicron variant in the first half of the year and ongoing uncertainty over global inflation levels, supply bottlenecks, trade disputes and appetite for transport fuels.

"While the impact of the Omicron variant is projected to be mild and short-lived, uncertainties remain regarding new variants and renewed mobility restrictions, amid an otherwise steady global economic recovery," Opec said in its Monthly Oil Market Report (MOMR).

The group puts global oil demand growth at 4.15mn b/d this year, for a total of 100.79mn b/d. It slightly reduced its estimates for demand in the third quarter, to 101.28mn b/d from 101.53mn b/d, and raised its forecast for the fourth quarter to 102.90mn b/d from 102.64mn b/d. US demand will falter slightly in the June-September period before recovering in the final three months of the year, when Chinese demand will also edge higher.

Opec's estimates for the call on its own crude in 2022 were also flat compared with its last MOMR, near 28.85mn b/d, for a 1.01mn b/d increase from 2021. A 300,000 b/d adjustment to its fourth-quarter projection was offset by a 200,000 b/d downwards revision in the third quarter.

On the supply side, Opec kept its non-Opec liquids output growth forecast unchanged at 3.02mn b/d in 2022, noting a marginal decline in non-Opec Africa. The group made no revisions to its 2021 supply growth forecast, with an upwards revisions to US output offset by drops in Brazil, Canada, Ecuador and Norway, primarily in the fourth quarter of last year.

It expects non-Opec production increases this year from the US, Russia, Brazil, Canada, Kazakhstan, Guyana and Norway.

Citing preliminary data, Opec said OECD commercial oil stocks fell by 16mn b/d in November to 2.72bn b/d, which is 389mn b/d lower than the same month in 2020, 247mn b/d below the latest five-year average and 221mn b/d below the 2015-19 average that Opec+ used as a baseline for its production deal.

The average production estimates of Opec's six secondary sources, which include Argus, show output up by 166,000 b/d from November to 27.88mn b/d in December. The steepest increases were from Saudi Arabia and Angola, while Libya and Nigeria experienced the sharpest declines. Secondary sources put output from Saudi Arabia, Opec's largest producer, at 9.932mn b/d, which was 90,000 b/d below Riyadh's direct communication to the Opec secretariat. The largest discrepancy between official communication and secondary sources occurred in Latin America, where independent estimators assessed Venezuelan output at an average 681,000 b/d, while Caracas self-reported 871,000 b/d.

By Ruxandra Iordache