Opec trims 2022 demand growth forecast

Opec has reduced its global demand growth forecast for this year to 3.1mn b/d, down by 300,000 b/d from its previous-month estimate, given "expectations of a resurgence of Covid-19 restrictions and ongoing political uncertainties" in the second half of 2022.

In its Monthly Oil Market Report (MOMR) the group now sees world oil demand at 100.03mn b/d in 2022. It sees demand growth at 2.7mn b/d in 2023, unchanged from its previous report.

It anticipates demand from OECD Americas will pick up the most this year, driven by US third- and fourth-quarter recoveries in appetite for gasoline and diesel. "Gasoline demand is due for a rebound following a relative drop in retail prices that should support the summer driving season," Opec said. It expects Chinese oil demand — especially the industrial sector's call on distillates — will improve in the second half of 2022, following hurdles created by Covid-19 restrictions implemented earlier in the year.

Opec is more optimistic on demand growth than the IEA, which earlier today put its estimate for the year at 2.1mn b/d. Opec foresees a "gradual economic recovery" in the second half of the year, assuming no escalation of the war in Ukraine. It said the consequences of a "potential further decline in Russian fossil fuel exports to G7 economies for energy supplies, energy prices and, consequently, global economic growth, remain to be seen."

Opec revised down the call on its members' crude by 300,000 b/d this year and in 2023, to 28.8mn b/d and 29.8mn b/d respectively.

On supply, Opec lightly trimmed its forecast for non-Opec liquids growth in 2022, to 2.14mn b/d from 2.15mn b/d. It revised up its assumptions for Russian output by 250,000 b/d to 10.88mn b/d this year, observing "higher-than-expected production in the last two months." It raised its Russian production estimate for 2023 by 90,000 b/d, to 10.43mn b/d.

Opec members raised production by 162,000 b/d on the month to 28.84mn b/d in July, Opec said citing the estimates of its seven secondary sources including Argus. The greatest discrepancies between self-reported July figures and those assessed by secondary sources were observed in the group's two largest producers. Saudi Arabia declared production near 10.815mn b/d, compared with the 10.693mn b/d average of secondary sources. Iraq reported 4.584mn b/d, compared with the secondary sources' 4.49mn b/d.

Citing preliminary data, Opec said OECD commercial oil stocks rose by 20.9mn bl on the month to 2.712bn bl in June, sitting 163mn bl below the same period of 2021, 261mn bl under the latest five-year average and 236mn bl below the 2015-19 average the Opec+ coalition uses as a reference point for its production commitments.

By Ruxandra Iordache