OPEC holds oil forecast steady, sees retraction in Europe
Quantum Commodity Intelligence – OPEC held its forecast for oil demand growth this year unchanged at 2.3 million bpd in its latest monthly outlook published Thursday, as a slowdown in Europe and the US is offset by extra demand in China.
The organisation trimmed its forecast for Europe and the US by a combined 130,000 bpd from its previous report in March, pushing Europe into negative growth for 2023 for the first time since the pandemic.
"Weak macroeconomic performance and ongoing tensions continue to impact economic and manufacturing activity in (Europe)," OPEC said.
It follows year-on-year retractions in OECD Europe for five consecutive months, with oil demand now expected to average 13.46 million bpd in 2023 from 13.51 million bpd in 2022.
The US is forecast to lead demand growth in the OECD region at an average of 160,000 bpd in the second and third quarters as a result of the upcoming driving season.
"But any weakening in the economy on the back of ongoing monetary tightening measures by the US Fed may offset some of this seasonal dynamic," the report said.
Global demand for gasoline and diesel OECD Europe is likely to remain "challenged" this summer, amid slowing economic activity, and OPEC sees a year-on-year decline in road fuel demand in the second and third quarters.
Subsequently, 2.2 million bpd of 2.3 million bpd of oil demand growth this year is forecast in non-OECD countries.
China leads the pack on a robust start to 2023 "on the back of an ongoing recovery in economic and social activity combined with firm petrochemical sector requirements, with all oil product categories showing healthy demand in February."
OPEC subsequently increased its estimate for China's first quarter demand by 200,000 bpd from its March estimate, and sees the country reaching 15.61 million bpd in 2023 compared with 14.85 million bpd in 2022.
Global oil demand is expected to reach 101.89 million bpd from 99.57 million bpd in 2022.
Supply
Non-OPEC liquids supply growth remains broadly unchanged at 1.4 million bpd to average 67.2 million bpd this year.
Minor downward revisions to OECD Europe and the Other Eurasia were largely offset by upward revisions to liquids production in the Latin America and China, while "large uncertainties" remain over US shale output this year.
The main drivers of liquids supply growth are expected to be the US, Brazil, Norway, Canada, Kazakhstan and Guyana, with declines expected primarily in Russia.
OPEC-13 crude oil production in March dropped by 86,000 bpd on the month to an average 28.80 million bpd, according to available secondary sources cited in the report.
