Chinese oil demand growth outweighs OECD weakness: Opec

  • : Crude oil, Oil products
  • 23/03/14

Opec has increased its 2023 oil demand growth forecast for China, outweighing a far weaker growth outlook in the OECD.

In its latest Monthly Oil Market Report (MOMR), Opec says its 2023 world oil demand growth forecast remains unchanged at 2.3mn b/d, with OECD Americas and OECD Europe both revised slightly lower, but Chinese growth revised higher, with jet/kerosene and gasoline leading demand growth.

OECD demand is expected to grow by 0.2mn b/d on the year to 46.23mn b/d, after a 0.35mn b/d forecast made in the previous MOMR. Demand in the non-OECD world is forecast to increase by 2.1mn b/d to 55.67mn b/d. China leads the way, jumping by 0.71mn b/d to 15.56mn b/d. The rise was forecast at 0.59mn b/d in the previous MOMR, and the higher revision comes after a rebound of 0.8mn b/d in January — from 0.2mn b/d in December — as the country abandoned its zero-Covid strategy and transport, economic and social activities could return to normal.

Oil demand dropped by 0.5mn b/d on the year in December in OECD Europe, a fourth consecutive monthly annual fall, Opec said, weakened by macroeconomic effects and "geopolitical developments", meaning the war in Ukraine and resultant sanctions. Diesel demand has been weak for seven months in Europe because of the faltering economic situation, and Opec expects European oil demand to show no growth this year, a revision down from its expected growth of a modest 40,000 b/d made a month ago.

US oil demand growth is also expected to be modest this year, at 90,000 b/d. Demand there fell by an unexpected 1.2mn b/d on the year in December, affected by bad weather.

Non-Opec liquids supply growth is forecast at 1.4mn b/d this year, to 67.2mn b/d, unchanged from last month's MOMR, with growth driven by the US, Brazil, Norway, Canada, Kazakhstan and Canada and declines primarily in sanctioned Russia. Opec expects Russian output to drop by 750,000 b/d this year to 10.3mn b/d, sharply lower than the 900,000 b/d drop forecast last month after higher than expected output in the first quarter this year. Opec said there are large uncertainties over non-Opec output growth because of the impact of "ongoing geopolitical developments", and the potential for US shale.

Opec puts the call on its members crude at 29.3mn b/d this year, up by around 800,000 b/d from 2022 and down by 100,000 b/d from last month's update. Argus estimates Opec crude output was 28.88mn b/d in February.

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