OPEC Raises 2023 Oil Demand Growth View

Global oil demand will rise this year by 2.32 million barrels per day, OPEC said. Reuters
Global oil demand will rise this year by 2.32 million barrels per day, OPEC said. Reuters
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OPEC Raises 2023 Oil Demand Growth View

Global oil demand will rise this year by 2.32 million barrels per day, OPEC said. Reuters
Global oil demand will rise this year by 2.32 million barrels per day, OPEC said. Reuters

OPEC has raised its 2023 global oil demand growth forecast in its first upward revision for months, due to China's relaxation of COVID-19 restrictions.

Global oil demand will rise this year by 2.32 million barrels per day (bpd), or 2.3%, the Organization of the Petroleum Exporting Countries said on Tuesday in a monthly report.

The projection is 100,000 bpd higher than last month's forecast.

A tighter supply and demand balance could support oil prices that have held relatively steady since December and stand at a little less than $86 a barrel. OPEC had kept its 2023 demand growth forecast steady for the past two months after a series of downgrades as the economic outlook worsened.

"Key to oil demand growth in 2023 will be the return of China from its mandated mobility restrictions and the effect this will have on the country, the region and the world," OPEC said in the report, according to Reuters.

"Concern hovers around the depth and pace of the country's economic recovery and the consequent impact on oil demand."

OPEC expects Chinese demand to grow by 590,000 bpd in 2023, up from last month's forecast of 510,000 bpd. China's oil consumption dropped for the first time in years in 2022, held back by its COVID containment measures.

The OPEC report was upbeat on economic prospects, nudging up its 2023 global growth forecast to 2.6% from 2.5%, though it said that a relative slowdown remained evident and cited high inflation and expected further increases to interest rates.

Other upside factors are the likelihood that the US Federal Reserve will manage a soft landing for the US economy and further commodity price weakness, OPEC said, although various potentially negative factors persist.



Oil Slips on Buildup in US Gasoline Stocks; Eyes on Weekend OPEC+ Meeting

FILE PHOTO: An oil and gas industry worker walks during operations of a drilling rig at Zhetybay field in the Mangystau region, Kazakhstan, November 13, 2023. REUTERS/Turar Kazangapov/File Photo
FILE PHOTO: An oil and gas industry worker walks during operations of a drilling rig at Zhetybay field in the Mangystau region, Kazakhstan, November 13, 2023. REUTERS/Turar Kazangapov/File Photo
TT

Oil Slips on Buildup in US Gasoline Stocks; Eyes on Weekend OPEC+ Meeting

FILE PHOTO: An oil and gas industry worker walks during operations of a drilling rig at Zhetybay field in the Mangystau region, Kazakhstan, November 13, 2023. REUTERS/Turar Kazangapov/File Photo
FILE PHOTO: An oil and gas industry worker walks during operations of a drilling rig at Zhetybay field in the Mangystau region, Kazakhstan, November 13, 2023. REUTERS/Turar Kazangapov/File Photo

Oil prices drifted lower on Thursday after a surprise jump in US gasoline inventories, with investors focusing on the OPEC+ meeting this weekend to discuss oil output policy.
Brent crude futures fell by 14 cents, or 0.2%, to $72.69 per barrel by 0401 GMT, while US West Texas Intermediate crude futures were also down 14 cents, or 0.2%, at $68.58 a barrel.
Trading is expected to be light due to US Thanksgiving holiday kicking off from Thursday.
Oil is likely to hold to its near-term bearish momentum as the risks of supply disruption fade in the Middle East and stemming from the higher-than-expected US gasoline inventories, said Yeap Jun Rong, a market strategist at IG.
US gasoline stocks rose 3.3 million barrels in the week ended on Nov. 22, the US Energy Information Administration (EIA) said on Wednesday, countering expectations for a small draw in fuel stocks ahead of record holiday travel.
Slowing fuel demand growth in top consumers the United States and China has weighed heavily on oil prices this year, although supply curtailments from OPEC+, which groups the Organization of the Petroleum Exporting Countries with Russia and other allies, have limited the losses.
OPEC+ will meet on Sunday. Two sources from the producer group told Reuters on Tuesday that members have been discussing a further delay to a planned oil output hike that was due to start in January.
A further deferment, as expected by many in the market, has mostly been factored into oil prices already, said Suvro Sarkar, energy sector team lead at DBS Bank.
"The only question is whether it's a one-month pushback, or three-month, or even longer. That would give the oil market some direction. On the other hand, we would be worried about a dip in oil prices if the deferments don’t come," he said.
The group, which pumps about half the world's oil, had previously said it would gradually roll back oil production cuts with small increases over many months in 2024 and 2025.
Brent and WTI have lost more than 3% each so far this week, under pressure from Israel's agreement to a ceasefire deal with Lebanon's Hezbollah group. The ceasefire started on Wednesday and helped ease concerns that the conflict could disrupt oil supplies from the top producing Middle East region.
Market participants are uncertain how long the break in the fighting will hold, with the broader geopolitical backdrop for oil remaining murky, analysts at ANZ Bank said.
Oil prices are undervalued due to a market deficit, heads of commodities research at Goldman Sachs and Morgan Stanley warned in recent days, also pointing to a potential risk to Iranian supply from sanctions that might be implemented under US President-elect Donald Trump.