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OPEC Raises Crude Oil Demand Forecast for 2023, Boosting Prices

Crude Oil gains

Harvest Global Markets :

The Organization of the Petroleum Exporting Countries (OPEC) has recently revised its crude oil demand forecast for 2023, projecting an increase of 2.4 million barrels per day (bpd). The latest Monthly Oil Market Report (MOMR) from OPEC indicates an upward revision of 100,000 bpd compared to the previous month’s forecast. This positive outlook for oil demand is driven by a continued rebound in Chinese economic activity and strong growth in non-OECD countries. As a result, oil prices have surged, with hopes of increased demand and supply disruptions in key oil-producing nations.

OPEC expects global oil demand to witness significant growth next year, with an estimated increase of 2.2 million bpd. This surge is anticipated to be fueled by the continued economic recovery in China and other non-OECD countries. OPEC’s upward revision reflects confidence in the resilience of the global oil market and its ability to meet rising demand. However, While OPEC predicts robust demand, it also acknowledges the contribution of non-OPEC countries to the overall oil supply. The MOMR states that non-OPEC liquids supply is projected to grow by 1.4 million bpd in 2023, with no change from the previous month’s outlook. Countries such as the United States, Brazil, Norway, Canada, Kazakhstan, and Guyana are expected to drive this supply growth. However, OPEC cautions about uncertainties surrounding US shale output, particularly with the potential OPEC highlights the importance of monitoring the US shale industry, which has the potential to impact global oil production. The report states that US liquids production is anticipated to grow by 700,000 bpd in 2024, primarily driven by the Permian Basin, non-conventional natural gas liquids (NGLs), and the Gulf of Mexico. OPEC also emphasizes the need for substantial investments, estimating that non-OPEC countries will spend $480 billion on upstream capital expenditure in 2024 to support the projected growth.

Oil prices have witnessed a significant upward trend, registering their third consecutive weekly gain for the first time since April. The recent surge is attributed to the shutdown of oil fields in Libya, resulting from protests by a local tribe against the kidnapping of a former minister, has led to a potential loss of more than 250,000 barrels of oil per day from the market. Furthermore, Shell has suspended loadings of Nigeria’s Forcados crude oil due to a potential leak at a terminal. These supply disruptions, combined with a decline in Russian crude exports, have contributed to the tightening of the oil market.

OPEC’s upward revision of its crude oil demand forecast for 2023, coupled with supply disruptions in Libya and Nigeria, has fueled optimism in the oil market. The expectation of increased demand, combined with supply challenges, has driven oil prices to rise significantly. However, uncertainties surrounding the US shale industry remain a factor to monitor. As the global economy continues to recover, OPEC’s outlook for oil demand growth provides a positive signal for the oil market’s future.

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