OPEC MOMR (Oct): World oil demand growth forecasts revised down for 2022 and 2023 by 500k BPD and 400k BPD respectively

DEMAND

• 2022 world oil demand growth is revised down by 500k BPD to reflect the recent macroeconomic trends and oil demand developments in various regions. These developments include the extension of China's zero-COVID-19 restrictions in some regions, economic challenges in OECD Europe, and inflationary pressures in other key economies, which have weighed on oil demand, especially in 2H22.


• For 2023, the forecast for world oil demand growth has been revised down by 400k BPD at 2.3mln BPD,


• The OECD is projected to grow by about 400k BPD, and the non-OECD by about 2.0mln BPD.

SUPPLY

• Preliminary data indicates that the global oil supply in September increased by 930k BPD M/M average 101.5mln BPD, up by 5.43mln Y/Y.


• According to secondary sources, total OPEC-13 crude oil production averaged 29.77mln BPD in September 2022, higher by 146k BPD M/M. Crude oil output increased mainly in Saudi Arabia, Nigeria, Libya and the UAE, while production in Iraq, Venezuela and IR Iran declined.


• The share of OPEC crude oil in total global production decreased by 0.1 pp to 29.3% in September compared with the previous month.

GROWTH

• By taking into consideration the current challenges and anticipated slowdown in 4Q22 and 1Q23, global economic growth for both 2022 and 2023 was revised down. The growth forecast for 2022 stands at 2.7%, compared with 3.1% in the previous month. The growth forecast for 2023 was revised down to 2.5%, compared with 3.1%.

GAS-TO-OIL SWITCHING

• Looking ahead, refinery runs are expected to slow going into 4Q22 as heavy maintenance work unfolds globally. However, ongoing tightness in product availability, particularly for gasoil, should remain supportive for refinery runs, along with expectations of a slight pick-up in diesel consumption for heating demand amid some additional potential for gas-to-oil switching. This will also depend on the severity of the winter in the Northern Hemisphere.


• Nevertheless, current signs of economic slowdown may further soften oil market fundamentals beyond the seasonal refinery turnaround period. Despite the likely economic challenges, there is an expectation for higher oil demand as the EU is set to lead global gas-to-oil switching due to soaring prices of natural gas and supply uncertainties during the winter.

Analysis details (13:00)

• Note, MOMR release is stale as it follows the OPEC+ decision last week to cut output targets by 2mln BPD, which occurred as a result of "uncertainty that surrounds the global economic and oil market outlooks.”


• That being said, the commentary surrounding gas-to-oil switching is interesting heading into the winter season in which the MOMR suggests there is an expectation for higher oil demand as the EU is set to lead global gas-to-oil switching due to soaring prices of natural gas and supply uncertainties during the winter.

12 Oct 2022 - 13:00- EnergyGeopolitical- Source: OPEC