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Msg  21730 of 21742  at  8/25/2022 4:03:04 PM  by


OPEC monthly report highlights

OPEC Monthly Oil Market Report – August 2022
Crude Oil Price Movements The OPEC Reference Basket fell $9.17, or 7.8%, m-o-m in July to average $108.55/b.
Oil futures prices remained highly volatile in July, amid a sharp drop in liquidity. The ICE Brent front month declined $12.38, or 10.5%, in July to average $105.12/b and NYMEX WTI declined by $14.96, or 13.1%, to average $99.38/b.
The Brent/WTI futures spread widened further by $2.58 to average $5.74/b. The market structure of all three major crude benchmarks – ICE Brent, NYMEX WTI and DME Oman – remained in strong backwardation, particularly Brent.
This was despite a sharp decline in front-month prices, as fundamental outlooks remained strong. However, the backwardation structure flattened in the first week of August. Hedge funds and other money managers extended heavy selloffs in July, cutting combined futures and options net long positions in ICE Brent and NYMEX WTI to their lowest level since April 2020.
World Economy World economic growth is revised down to stand at 3.1% for 2022 and 2023. This is a result of weaker 2Q22 growth in the major economies and an observed soft trend in some key economies.
For the US, GDP growth for 2022 is revised down to 1.8%, and to 1.7% for 2023. Euro-zone economic growth for 2022 is expected at 3.2%, while growth in 2023 is revised down to 1.7%. Japan’s economic growth for 2022 is revised down to stand at 1.4%, to be followed by growth of 1.6% in 2023. China’s 2022 growth forecast is revised down to 4.5%, while the 2023 forecast remains unchanged at 5.0%. The forecast for India remains unchanged at 7.1% in 2022 and 6.0% in 2023. Brazil’s economic growth forecasts remain at 1.2% in 2022 and 1.5% in 2023. The 2022 forecast for Russia is unchanged, showing a contraction of 6.0% followed by growth of 1.2% in 2023. Downside risks remain, stemming from the ongoing geopolitical tensions, the continued pandemic, ongoing supply chain issues, rising inflation, high sovereign debt levels in many regions, and expected monetary tightening by central banks in the US, the UK, Japan and the Euro-zone.
World Oil Demand World oil demand growth in 2022 is revised downwards from the previous month’s assessment but still shows healthy growth of 3.1 mb/d, including the recently observed trend of burning more crude in power generation. Oil demand in the OECD is estimated to grow by 1.6 mb/d, while the non-OECD is expected to grow by 1.5 mb/d. Total oil demand is expected to average around 100 mb/d in 2022. The first half of this year is revised higher, amid better-than-anticipated oil demand in the main OECD consuming countries. However, oil demand in 2H22 is revised lower, amid expectations of a resurgence of COVID-19 restrictions and ongoing geopolitical uncertainties. For 2023, the forecast for world oil demand growth remains unchanged at 2.7 mb/d, with total oil demand averaging 102.7 mb/d. The OECD is expected to grow by 0.6 mb/d and the non-OECD by 2.1 mb/d. Oil demand in 2023 is expected to be supported by a still-solid economic performance in major consuming countries, as well as improving geopolitical developments and improvement of COVID-19 in all regions. World Oil Supply Non-OPEC liquids supply growth in 2022 is forecast at 2.1 mb/d to average of 65.8 mb/d, broadly unchanged from the previous assessment. An upward revision to Russia is offset by downward revisions to the US, Norway and Kazakhstan. The main drivers of liquids supply growth for 2022 are expected to be the US, Canada, Brazil, China and Guyana, while production is expected to decline mainly in Indonesia and Thailand. In 2023, growth in non-OPEC liquids production remains unchanged at 1.7 mb/d to average 67.5 mb/d. The main drivers for growth in 2023 are expected to be the US, Norway, Brazil, Canada and Guyana.
However, uncertainty regarding the operational and financial aspects of US production, as well as the geopolitical situation in Eastern Europe remains high. OPEC NGLs and non-conventional liquids are forecast to grow by 0.1 mb/d in 2022 to average 5.4 mb/d and by 50 tb/d to average 5.4 mb/d in 2023. OPEC-13 crude oil production in July increased by 216 tb/d m-o-m to average 28.90 mb/d, according to available secondary sources. 

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