As Per OPEC’s Revised Estimates, The World Crude Oil Demand In 2022 Will Be At 2.5 mb/d

World Crude Oil Demand In 2022 Will Be At 2.5 mb/d

In November, the OPEC reference basket (ORB) averaged USD 89.73/b, facing a dip by USD 3.89, or 4.2 percent month over month. The average price of the ICE Brent front-month flumped by 2.9 percent, or USD 2.74, to USD 90.85/b, and the average price of the NYMEX WTI fell by 3.0 percent, or USD 2.64, to USD 84.39/b.

The Brent/WTI futures differential decreased by 10 cents to an average of USD 6.46/b, narrowing further month over month.

In late November, the market structures of ICE Brent and NYMEX WTI dramatically weakened, and the first to third-month spreads briefly entered contango. Hedge funds and other money managers' combined net long positions in ICE Brent and NYMEX WTI futures and options decreased substantially.

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The estimated 2.5 mb/d global oil demand for 2022 has not altered. With better-than-expected OECD transportation fuel consumption, the oil demand was revised upward for the year 3022. However, the estimate for the year 4022 was revised downward due to a slowdown in the non-OECD due to decreased mobility and sluggish industrial activity in China.

The projected rise in global oil demand for 2023 is likewise maintained at 2.2 mb/d, with OECD growth increasing by 0.3 mb/d and non-OECD growth rising by 1.9 mb/d. Numerous factors, including changes in the global economy, COVID-19 containment measures, primarily in China, and continued geopolitical tensions, could affect this estimate.

The prognosis for 2022 calls for a 1.9 mb/d increase in non-OPEC liquids supply, which is largely unchanged from last month's prediction. Liquid production adjustments in the OECD Americas, Russia, and Latin America were revised upward, whereas revisions in the OECD Europe, Other Eurasia, and Other Asia were revised lower.

The US, Canada, Guyana, Russia, China, and Brazil are anticipated to be the key growing regions for the liquids supply this year, while output is anticipated to fall mostly in Norway and Thailand. The predicted 1.5 mb/d increase in non-OPEC liquids output for 2023 is virtually unchanged from the previous year. While oil production is anticipated to fall mostly in Russia and Mexico, the US, Norway, Brazil, Canada, Kazakhstan, and Guyana are likely to be the key drivers of expansion in the liquid supply.

Nonetheless, large uncertainties persist around geopolitical development in Eastern Europe, as well as the US shale output potential next year. 

The average volume of OPEC NGLs and non-conventional liquids is expected to increase by 0.1 mb/d in 2022 to 5.39 Mb/and by 50 tb/d to 5.44 mb/d in 2023. Available secondary sources indicate that OPEC-13 crude oil output declined by 744 tb/a month-over-month in November to an average of 28.83 mb/d.

According to estimates based on weekly statistics, US oil exports hit a new record high of 4.2 mb/d in November while US crude imports rebounded from a six-month low to an average of 6.3 mb/d. In October, China's crude imports increased by 10.2 mb/d on average. China's goods exports decreased across the majority of its top products after reaching a 15-month high. In October, India's crude imports averaged 4.2 mb/d, recouping the losses from the previous month. India's product exports decreased by almost 21%, with diesel shipments falling significantly.

Despite falling from a two-year high to an average of 2.7 mb/d in October, in keeping with seasonal trends, Japan's crude imports nevertheless demonstrated 15 months of continuous year-over-year growth. Crude imports into the OECD Europe region were constant in the third quarter of 2022 before declining in November, according to tanker tracking data.

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Prior to the implementation of EU sanctions, Russian crude imports into OECD Europe decreased by nearly 1.0 mb/d year on year in November. However, flows to Turkey sharply increased, reaching as high as 400 tb/d, according to tanker tracking data, up from relatively low levels last year.

As per Procurement Resource, the OPEC reference basket (ORB) averaged USD 89.73/b in November; this displays a monthly decline of USD 3.89 or 4.2 percent. The average price for the ICE Brent front-month dropped by 2.9 percent, or USD 2.74, to reach USD 90.85/b, while the average price for the NYMEX WTI dropped by 3.0 percent, or USD 2.64, to reach USD 84.39/b.

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