GulfSlope Energy Inc (GSPE)

[smith199]

OPEC Featured Article - ‘Summer oil market outlook’, Released April 12, 2022

OECD Composite Leading Indicators News Release, Paris, April 11, 2022:
https://www.oecd.org/sdd/leading-indicators/composite-leading-indicators-cli-oecd-04-2022.pdf


FEATURED ARTICLE: Summer Oil Market Outlook

At a global level, as most countries relaxed lockdown measures imposed during the COVD-19 pandemic, oil demand in 1Q22 witnessed strong growth of almost 5 mb/d y-o-y. However, due to recent geopolitical developments in Eastern Europe, 2Q22 and 3Q22 are both forecast at growth of 3.5 mb/d y-o-y.

Nevertheless, demand in the summer months is anticipated to be driven by increasing mobility, leading to a further pickup in gasoline demand, while diesel requirements are projected to continue on a healthy upward trend. The US is expected to see the bulk of this product demand growth, increasing by around 0.9 mb/d in 2Q22 and 3Q22, y-o-y. Although OECD Europe is strongly impacted by the current geopolitical developments, the region is expected to see demand growth of around 0.5 mb/d y-o-y on average in 2Q22 and 3Q22, with the impact of COVID-19 expected to fade in the summer season.

In the non-OECD countries, India’s oil demand picked up strongly from the contraction seen in 4Q21 to average growth of 0.3 mb/d y-o-y in 1Q22. Gasoline and diesel demand have already surpassed 2021 levels as lockdown measures were mostly removed and as the recovery gained traction. However, China is confronted with a resurgence of COVID-19, causing oil demand growth in 1Q22 to drop to 0.4 mb/d, y-o-y, from 0.8 mb/d growth seen in 4Q21.

For 2Q22 and 3Q22, global oil demand is expected to grow by 3.5 mb/d, y-o-y, on average. The 2Q22 gasoline and diesel demand is expected at 25.4 mb/d and 27.7 mb/d, respectively. Moreover, 3Q22 is projected to recover and surpass pre-pandemic levels, with global gasoline demand forecast at 27.5 mb/d and diesel at 29.0 mb/d.

On the refining side, the heavy refinery turnaround season is expected to drive global offline capacity to a peak in April 2022, before declining again thereafter. This should lead to a return of nearly 5.0 mb/d of capacity for operations by July 2022, supporting refinery intakes. At the same time, the increasingly tight global product balance will drive refinery intakes.

Total OECD commercial product inventories in February were around 150 mb below the latest five-year average, with gasoline and distillate inventories standing at 27 mb and 84 mb below the latest five-year average. The combination of restricted fuel supplies and low product inventory levels, amid projections of rising product consumption during the summer season, could lead to a tighter product supply-demand balance, with a significant shortage in gasoline and distillates.

The geopolitical tensions in Eastern Europe are expected to dislocate product supply to other regions, lending support to refinery intakes in those regions. Indeed, the US has increased diesel exports to Europe and Latin America, with waterborne diesel exports out of the US Gulf Coast having climbed notably in late March, nearly reaching the highest level seen in over two years. Refinery intakes are also expected to pick-up in Asia and the Middle East in the coming months, in an attempt to make up for any shortfall in product supply.

Given the current uncertainty surrounding the recent developments, the geopolitical turmoil and the outlook for the summer months, the countries participating in the ‘Declaration of Cooperation’ continue to reaffirm their unwavering commitment to supporting oil market stability by ensuring adequate crude oil supply to the global market.