The global oil demand is projected to increase by 2.3 mb/d to reach 101.7 mb/d in 2023; however, this growth is overshadowed by a weakened macroeconomic climate, leading to a downward revision of nearly 400 kb/d in global 4Q23 demand growth.
Europe contributes significantly to more than half of this decline. The anticipated slowdown persists into 2024, with global gains halving to 1.1 mb/d due to below-trend GDP growth in major economies and the impact of efficiency improvements and the expanding electric vehicle fleet on oil demand.
Contrary to expectations, US oil supply continues to surge, surpassing 20 mb/d.
Coupled with record production from Brazil and Guyana, along with increased Iranian flows, global oil output is set to rise by 1.8 mb/d to 101.9 mb/d in 2023. In 2024, non-OPEC+ nations are expected to drive global gains, reaching 1.2 mb/d, as OPEC+ deepens its voluntary oil cuts.
Russian crude export prices experienced a significant drop in November, with Urals falling below the $60/bbl price cap on December 6. Lower prices, coupled with a 200 kb/d decrease in oil shipments, resulted in a 17% month-on-month decline in November export revenues for crude and products, reaching $15.2 billion. The decline in revenues was more pronounced for crude (-$2.4 billion m-o-m) than products (-$800 million).
Refinery margins in Europe and Singapore saw a marginal rebound in November, but the US Gulf Coast underperformed for the third consecutive month.
Weakness in diesel and gasoline cracks primarily contributed to the decline in the US hub. Global crude runs in 4Q23 are expected to be significantly weaker than previously estimated due to extended and more profound refinery turnarounds, dropping by 3.6 mb/d month-on-month in October and slowly recovering to a seasonal peak of 84.2 mb/d by December 2023.
Observations indicate a decline of 19.6 mb in global oil inventories in October. While crude oil inventories remained mostly unchanged, oil product stocks fell for the first time in four months, countering the trend observed in 3Q23. OECD and non-OECD on-land stocks fell by 18.9 mb and 24.2 mb, respectively, while oil on water increased by 23.5 mb.
In November, ICE Brent futures experienced a continued decline, reaching $83/bbl with surging US crude exports and weakened global demand growth impacting the prompt crude price structure. The WTI contango deepened, and the bearish trend in oil prices persisted in early December after the OPEC+ meeting on November 30 failed to curb the price decline, leaving Brent prices approximately $25/bbl below September’s annual high.
