![]() Deeper cuts from some OPEC+ producers kicked in while output from Iraq’s northern Kurdish region and some Canadian oil sands remained shut in. In May, world oil production fell by 660 kb/d to 100.6 mb/d. While oil demand is expected to continue to rise, both seasonally and structurally over the remainder of the year, only a marginal increase in supply is foreseen. In advanced and developing economies alike, rebounding air traffic is consolidating jet/kerosene’s position as the main contributor to global 2023 demand gains (1.1 mb/d). Having spent 4Q22 and 1Q23 in contraction, the OECD returns to muted growth in 2Q23, with the US driving season getting off to a strong start. Indian demand is equally robust with the latest readings for May showing both gasoline and diesel breaking records.īy contrast, OECD demand remains lacklustre amid an ongoing manufacturing slump and generally subdued economic growth. China accounts for 60% of the gains, with soaring transport and petrochemical use propelling apparent demand in April to an all-time high of 16.3 mb/d. Global oil demand continues to defy the challenging macroeconomic climate and is set to rise by 2.4 mb/d in 2023, outpacing last year’s 2.3 mb/d increase as well as earlier expectations. Oil prices appear to be taking their cue from the former, with benchmark North Sea Dated trading at $73/bbl - nearly half the high of 2022 - despite a looming supply deficit. Bearish macroeconomic indicators and concerns over demand growth are clashing with resurgent oil use in key consuming countries. Oil markets are struggling for direction as conflicting data points cloud the outlook. Saudi Arabia’s announcement of deeper output cuts in early June was unable to stem the decline. Attesting to oil’s bear market, the current ICE Brent future price of around $73/bbl is $50/bbl below summer 2022’s peak. North Sea Dated fell by around 10% in May compared with April amid growing concerns about the impact of hawkish central bank policies on the global economy.Preliminary May data show a further stock build in OECD countries of 21.1 mb. OECD industry stocks rose by 33.6 mb but were still 86.4 mb lower than the five-year average. Global observed oil inventories rose by 10 mb in April as a 15.9 mb decline in oil on water and a 1.1 mb drop in non-OECD stocks partly offset a 27 mb build in OECD stocks.Refinery margins were stable in May, with gains in Atlantic Basin light distillates partially offset by weaker middle distillates. New capacity in Oman and Kuwait and ample availability of discounted Russian crude in Asia skews activity away from the Atlantic Basin. A further decline in OECD crude runs next year is more than offset by the 1.3 mb/d increase in non-OECD activity. Global refinery throughputs are forecast to increase by 1.8 mb/d in 2023 and 1 mb/d next year when it averages 83.4 mb/d.Estimated export revenues fell by $1.4 bn to $13.3 bn, down 36% on a year ago, with average crude prices easing from $60/bbl in April to $55/bbl in May. China and India accounted for at least 56% of total Russian exports, while shipments to Africa, the Middle East and Latin America made up another 12%. Crude oil exports rose by 90 kb/d to 5.2 mb/d while product exports slumped by 350 kb/d to 2.6 mb/d. Russian oil exports dropped by 260 kb/d in May to 7.8 mb/d, largely unchanged from a year ago.Saudi Arabia has promised to curb output by a further 1 mb/d in July. In May, world oil supply fell by 660 kb/d to 100.6 mb/d after extra cuts from some OPEC+ producers kicked in. Total oil supply is forecast to reach record high levels of 101.3 mb/d this year and 102.3 mb/d next year. As for OPEC+, total oil output in 2024 is set to decline by 200 kb/d as production curbs are carried through the year. Non-OPEC+ leads world supply growth through next year, adding 1.9 mb/d in 2023 and 1.2 mb/d in 2024.An increasingly adverse macroeconomic climate will act as a headwind in 2024, and as the post-pandemic recovery will largely have run its course, oil demand growth is set to slow to 860 kb/d. The non-OECD accounts for 90% of gains this year, as OECD demand remains lacklustre amid the current manufacturing slump. China’s rebound continues unabated, with its oil demand reaching an all-time high of 16.3 mb/d in April. ![]() ![]() World oil demand will grow by 2.4 mb/d in 2023 to 102.3 mb/d, a new record.
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