OPEC revises 2021 oil demand down, leaves 2022 estimate unchanged

Highlights of the oil market

Crude Oil Price Movements

Crude oil prices rebounded in September, gaining around 5%, supported by strong oil market fundamentals amid a slow restart in US oil production, continued recovery in oil demand and a drop in stocks, as well as an easing of mobility restrictions linked to COVID-19 in several Asian countries. In addition, concerns about shortages of natural gas and coal in Europe and Asia have fueled feelings of increased demand for oil. The value of the OPEC benchmark basket (ORB) increased $ 3.55 or 5.0% month-on-month in September to stand at $ 73.88 / bbl. Year-to-date (year-to-date), ORB has increased by $ 26.21, or 64.5%, to an average of $ 66.83 / bbl compared to the same period last year . The first month of Brent ICE rose $ 4.37, or 6.2%, in September to an average of $ 74.88 / b, while NYMEX WTI rose $ 3.83, or 5.7%, for an average of $ 71.54 / b. As a result, the Brent / WTI spread widened further in September to $ 3.34 / bbl, its highest since last April. The market structure of the three main oil references
– Brent, WTI and Dubai – stayed behind. However, the Brent forward curve strengthened, while the offset from WTI and Dubai flattened slightly. Hedge funds and other fund managers boosted bullish bets in September as oil prices hit multi-year highs, with the risk of natural gas and coal shortages prompting speculators to bet on higher oil prices.

Mondial economy

Global economic growth forecasts for 2021 and 2022 remain unchanged from last month’s estimate of 5.6% and 4.2%, respectively. Given the slowdown in momentum in 3Q21, the forecast for the US economy for 2021 is revised slightly down to 5.8% from 6.1%, while the forecast for 2022 remains unchanged at 4.1%. Economic growth in the euro zone is revised to 5% against 4.7% for 2021 and to 3.9% against 3.8% for 2022, after a strong rebound in 2Q21. The forecast for Japan is revised to 2.6% from 2.8% for 2021, due to social distancing measures related to COVID-19 underway in 3Q21, while the forecast for 2022 remains at 2%. After a strong recovery in the first half of the year, the Chinese economy is expected to slow down somewhat, leaving growth forecasts at 8.3% in 2021 and 5.8% in 2022, a downward revision of 0.2 percentage point for both years. Meanwhile, India’s growth forecast for 2021 is unchanged at 9% for 2021 and 6.8% for 2022, although downside risks remain. Russia’s forecasts are revised upwards from 3.5% to 4% for 2021 and from 2.5% to 2.7% for 2022, benefiting from a more stable oil market. Brazil’s growth forecast remains unchanged for 2021 and 2022 at 4.7% and 2.5%, respectively. The current robust growth of the global economy continues to be challenged by uncertainties, such as the spread of COVID-19 variants and the pace of vaccine deployments around the world, as well as ongoing disruptions in the chain. global supply. In addition, sovereign debt levels in many regions, along with mounting inflationary pressures and potential central bank responses, remain key factors requiring close monitoring.

Global oil demand

Global oil demand is expected to increase by 5.8 mb / d in 2021, revised down from 5.96 mb / d in the previous month’s assessment. The downward revision is mainly due to lower than expected actual data for the first three quarters of this year, despite sound oil demand assumptions for the last quarter of the year, which will be supported by a seasonal increase in the price. demand for petrochemicals and heating. and the potential switch from natural gas to petroleum products due to high gas prices. OECD and non-OECD figures are adjusted downward, with the downward revision in OECD regions focused on 1H21, while the non-OECD revision is focused on 3Q21. The world is expected to consume 96.6 mb / d of petroleum products this year. For 2022, the growth in world oil demand is unchanged at 4.2 mb / d. As a result, next year’s global demand is expected to average
100.8 mb / d. Demand should be supported by good economic dynamics in the main consumer countries and better management of the COVID-19 pandemic.

Global oil supply

The growth in the supply of non-OPEC liquids in 2021 is revised downwards by 0.3 mb / d compared to the estimate of the previous month to now stand at 0.7 mb / d. The revisions were primarily driven by a downward adjustment in 3Q21 due to factors such as production shutdowns in the Gulf of Mexico in the United States caused by Hurricane Ida; maintenance of the Tengiz field in Kazakhstan; and a force majeure event in Canada at Suncor’s oil sands site. The impact of the hurricane led to a downward revision of the supply of liquids in the United States in 2021, from a growth of 0.1 mb / d to a contraction of 0.1 mb / d . The main drivers of supply growth in 2021 remain Canada, Russia, China, Norway and Brazil. Likewise, the non-OPEC supply growth forecast for 2022 is revised upwards by 0.1 mb / d due to the change of base to now stand at 3.0 mb / d. Russia and the United States are expected to be the main drivers, followed by Brazil, Norway, Canada, Kazakhstan, Guyana and other DoC countries. OPEC’s NGLs are expected to increase by 0.1 mb / d in 2021 and 2022 to average 5.2 mb / d and 5.3 mb / d, respectively. OPEC’s crude oil production in September increased 0.49 mb / d month-on-month, averaging 27.33 mb / d, according to available secondary sources.

Product markets and refining operations

Refinery margins continued their uptrend in September globally, with strong support coming from the mid-barrel. The tightening of the product balance caused by supply-side constraints in previous months has been exacerbated by the start of the peak refinery maintenance season against the backdrop of declining product exports from China. China. Middle distillates were the main driver of margins in all regions, while in Asia this increase was outweighed by the strong performance of fuel oil. Meanwhile, gasoline markets weakened as their crack spreads narrowed from post-pandemic highs recorded the previous month, amid less optimistic demand prospects as peak driving season. was nearing its end.

Oil tanker market

Tariffs for dirty tankers remained low in September against a background of a persistent imbalance between supply and demand in tonnage, keeping prices at low levels or even in deficit. Meanwhile, positive signs are appearing for the last quarter of the year, as loading schedules are expected to see a 20% increase in Russian exports by water and a 10% increase in flows from the North Sea. , as part of the planned upward adjustments to OPEC production. However, a sustained recovery in the oil tanker market could take up to 12 months to materialize to allow demand from emerging and developing markets to return and scrapping sufficient to reduce excess tonnage available.

Trade in raw and refined products

Preliminary data shows U.S. crude imports in September recovering from a slight decline the previous month to an average of 6.4 mb / d, while U.S. crude exports averaged 2.6 mb / d / d in September, continuing an alternation of ups and downs, this time on the lower side. After four months of relatively low levels, China’s crude imports surged to 10.5mb / d in August, pushed up by the arrival of storm-delayed cargoes, although political uncertainties continued to decline. ‘affect China’s trade flows. India’s crude imports have finally recovered, after following a general downward trend since December 2020, reaching an average of 4.1 mb / d in August. Tracking data from tankers shows India’s crude imports remained stable in September. Japan’s crude imports continued to recover from low levels, reaching their highest level since April 2020 at 2.7 mb / d in August. The country’s crude and product imports are expected to be boosted by demand in the electricity sector for fuel oil as well as direct-fired crude, amid reports of a restart of oil-fired power plants.

Commercial stock movements

Preliminary data from August 2021 showed that the total OECD commercial oil inventories fell $ 19.5 million month-on-month to $ 2,855 million. This was 363MB less than the same period a year ago, 183 less than the last five-year average and 131MB less than the 2015-2019 average. Within components, OECD trading crude inventories fell 23.0 mb month on month in August, ending the month at 1,362 mb. That figure was down 102MB from the last five-year average and 87MB below the 2015-2019 average. In contrast, total OECD product stocks rose 3.2 mb month on month in August to 1,493 mb. This was 81MB less than the last five-year average and 43MB less than the 2015-2019 average. In terms of forward hedging days, OECD trading stocks fell 0.1 mth day in August to 62.5 days. This was 12.3 days less than the same period in 2020, 2.5 days less than the last five-year average and 0.3 days less than the 2015-2019 average.

Supply and demand balance

OPEC’s demand for crude in 2021 is revised upward by 0.1 mb / d from the previous month’s estimate to 27.8 mb / d, or around 5.0 mb / d. j more than in 2020. OPEC’s crude demand in 2022 has also been revised upward by 0.1 mb / d from the previous month’s estimate to 28.8 mb / d / d, i.e. around 1.0 mb / d more than in 2021.
Source: OPEC


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Felix J. Dixon

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