Opec holds demand growth outlook for 2022 steady

Opec has again left its outlook for global oil demand growth unchanged, while signalling optimism about prospective increases in transport fuel consumption.

In its latest Monthly Oil Market Report (MOMR), published today, the group retained its projection global oil demand growth of 4.15mn b/d this year. It marginally adjusted higher its projections for global demand by 10,000 b/d for the full year, to an average of 100.8mn b/d, revised its third-quarter outlook up by 40,000 b/d to 101.32mn b/d and raised its fourth-quarter estimate by 20,000 b/d to 102.92mn b/d.

Notably Opec lifted its demand projections for China, the world's largest crude importer, by 50,000 b/d to 15.65mn b/d in the fourth quarter, bringing this year's total higher by 10,000 b/d to 15.18mn b/d.

"The main contributors in 2022 world oil demand are gasoline and diesel, which are anticipated to account for around half of the forecasted world oil demand growth," Opec said, noting also resurgent airline travel in the US, Europe, China and Middle East leading to recoveries in jet fuel use. It expects supportive fiscal and monetary policies in OECD countries to offset the effect of the Covid-19 Omicron variant, and said accelerating industrial activities will boost diesel demand.

"[OECD] mobility has recovered substantially with domestic, regional and international flights already showings signs of recovery," it said.

Opec revised higher its estimates for the call on its crude production, by 100,000 b/d to 28.9mn b/d, which is roughly 1mn b/d above 2021. Compared with the January MOMR, Opec has implemented upwards adjustments of 100,000 b/d to its second, third and fourth-quarter projections.

Citing preliminary data, Opec said OECD commercial crude stocks saw a sharp month-on-month draw of 31.2mn bl to 2.725bn bl, putting them 311mn bl under the same month of 2021, 210mn bl below the latest five-year average and 202mn bl beneath the 2015-19 average that Opec+ used as a baseline for its production deal.

On supply, Opec left steady its forecast for year-on-year non-Opec supply growth, at 3.02mn b/d for an average 66.6mn b/d this year, with the main drivers of this increase to come from the US, Russia, Brazil, Canada, Norway, Kazakhstan and Guyana.

Average output estimates of Opec's six secondary sources, including Argus, indicate the group's January production rose by 64,000 b/d to 27.98mn b/d. The largest month-on-month increase was in Nigeria, where output rose by 81,000 b/d to average 1.398mn b/d following months of volatility caused by sabotage and infrastructure difficulties. Secondary sources found Opec de facto leader Saudi Arabia's production rose by 54,000 b/d to average 9.99mn b/d, below Riyadh's self-declared increase of 123,000 b/d to 10.145mn b/d. Secondary sources indicated the largest drops in Libya and Venezuela, by 45,000 b/d and 51,000 b/d respectively. Forced port shutdowns in Libya and the inability to keep diluting heavy wellhead crude into exportable grades in Venezuela affected these figures.

By Ruxandra Iordache