Opec has increased its global oil demand forecast for 2022 by almost 1mn b/d, taking it back above 100mn b/d, even though there was some disquiet about this at the group's recent meetings.
Opec's latest Monthly Oil Market Report (MOMR), published today, pegs oil demand in 2022 at 100.83mn b/d, up by 4.15mn b/d from 2021 and a steep hike from the 3.28mn b/d growth projection it made last month. Opec pinned the adjustment on a stronger pace of demand recovery and a "steady" economic outlook in all regions.
"As vaccination rates rise, the Covid-19 pandemic is expected to be better managed and economic activities and mobility will firmly return to pre-Covid-19 levels," the MOMR said, adding that additional support could come from further US fiscal stimulus.
The revision was first made during the Opec+ joint technical committee (JTC), which monitors market conditions, and which preceded the 1 September Opec+ ministerial meeting.
But some Opec+ delegates at those meetings said this forecast was "optimistic", and that it may be revised at the December gatherings. Demand faces challenges from rising Covid-19 rates, notably in Asia-Pacific, and slowing industrial activity in key buying regions. This could lead to an oversupplied market next year if Opec+ continues with its plan to increase collective production quotas by 400,000 b/d until April, and then by 432,000 b/d beyond that.
Longer-term demand risks could arise should inflation lead to increases in key interest rates.
Opec's MOMR is clear that the pandemic will affect demand in the near term. It revised down its fourth-quarter demand forecast by 110,000 b/d to 99.70mn b/d, although an upwards revision to the third-quarter number has pushed Opec's 2021 oil demand forecast up by 110,000 b/d from the previous report to 96.68mn b/d.
On the supply side, Opec said this year's non-Opec liquids supply growth is 170,000 b/d lower than forecast in last month's report — a result of outages in the Gulf of Mexico — and lower-than-expected North Sea production in the third quarter. Opec sees this year's non-Opec supply rising by 92,000 b/d year on year to 63.85mn b/d; its 2022 growth projection is unchanged at 2.95mn b/d.
Taking into account the lower non-Opec supply, Opec has increased the forecast call on its own members' crude by 260,000 b/d this year, to 27.67mn b/d. The group's output was 26.76mn b/d last month, up by 151,000 b/d from July, according to an average of secondary sources including Argus.
Citing preliminary data, Opec said OECD commercial stocks rose by 10.5mn bl in July from the month before to 2.91bn bl, which is 305.9mn bl lower than a year earlier and 57.2mn bl below the 2015-19 average.
