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Oil Market Report Summary (16 November 2021)

Core Content

The Oil Market Report provides an analysis of global oil demand, supply, refining activity, and price trends as of November 16, 2021. It outlines the current state of the market, including factors influencing demand and supply, and offers forecasts for the remainder of 2021 and 2022.

Main Points

Global Oil Demand

• Growth: Global oil demand is expected to strengthen further as more countries reopen and travel increases.
• Forecast: Demand growth for 2021 is forecast at 5.5 mb/d, and for 2022 at 3.4 mb/d.
• Drivers: Robust gasoline consumption, rising international travel, and petrochemical demand support the outlook.
• Tempering Factors: New Covid waves, weaker industrial activity, and higher oil prices will limit gains.
• Jet Fuel: Jet fuel demand is recovering but still below pre-Covid levels. It is forecast to rise by 550 kb/d in 4Q21 and 180 kb/d in 1Q22, reaching 6.1 mb/d in 2022.
• Gasoline: Gasoline demand is rising, with an increase of 250 kb/d in 4Q21 and 70 kb/d in 1H22.
• Naphtha: Naphtha demand is also increasing, by 70 kb/d for 2021 and 130 kb/d for 2022.
• Fuel Switching: Increased use of oil in power generation due to natural gas and coal shortages supports demand growth.
• OECD Demand: OECD total oil demand rose by 51 mb in September, with crude oil and middle distillate stocks being the main contributors. OECD demand is forecast to be 46.2 mb/d in September 2021, 3.5 mb/d higher than in September 2020 but still 1.3 mb/d below 2019 levels.

Global Oil Supply

• Increase: Global oil supply is expected to rise by 1.5 mb/d over November and December.
• US Contribution: The US is expected to account for 400 kb/d of the increase, with production rising due to strong oil prices.
• OPEC+ Contribution: Saudi Arabia and Russia combined will provide 330 kb/d, in line with OPEC+ targets.
• Supply Trends: Oil supply is already rising, with a 1.4 mb/d increase in October after the impact of Hurricane Ida.

Refining Activity

• Growth: Global refining throughput is expected to increase by nearly 3 mb/d from October to December.
• Margins: Refinery margins rose in October due to tight product markets.
• Seasonal Trends: Refinery throughput is expected to stabilize in 1H22 before a seasonal increase in 3Q22.

Prices

• Brent Crude: Brent crude futures are trading around $81/bbl, down from a high of $86/bbl in October.
• WTI Crude: WTI at Cushing prices rose by $9.79/bbl to $81.96/bbl in October.
• Market Drivers: Prices have eased due to rising supplies and a slowdown in demand growth.

Key Information

Publishing Schedule

• The 2022 Edition of the Oil Market Report will be published on 16 March 2022.
• The report will include data and projections through end-2022 with abridged text.
• Supply/demand forecasts will be extended to 2023 in the report dated 15 June 2022.
• The Annual Statistical Supplement 2021 Edition will be published with the report on 11 August 2022.
• All reports are released at 10:00 Paris local time.

Regional Developments

• OECD Americas: Demand rose in September and October, driven by strong US mobility. US demand is forecast to be 1.9 mb/d higher in 4Q21 than in 4Q20 but still 720 kb/d lower than in 4Q19.
• OECD Europe: European demand outperformed expectations in September, reaching its highest level since November 2019. However, it remains 970 kb/d below 2019 levels.
• OECD Asia & Oceania: Demand is recovering, with a forecast of 1.2 mb/d for 2022, still below pre-pandemic levels.
• Non-OECD: Non-OECD demand is expected to increase, with the US leading the supply gains for 2022.

Stock Developments

• OECD Stocks: OECD total industry stocks plunged by 51 mb in September, with crude oil and middle distillates accounting for most of the decline. Preliminary data for October suggest a marginal stock build.
• Global Storage: Storage tanks are likely to remain in deficit through year-end, as OPEC+ continues to undershoot its supply targets.

Market Outlook

• Price Trends: Prices are expected to remain elevated but may stabilize as supply increases and demand growth slows.
• Economic Factors: World GDP growth is forecast at 5.7% for 2021 and 4.5% for 2022, affected by supply chain disruptions and the energy crisis.
• Consumer Impact: Consumers are facing higher prices, and a potential inventory build in 2022 is expected to alleviate some of the pressure.

Tables

Global Demand by Product

Global Demand by Region

Key Boxes

• Box 1: Jet fuel demand is expected to grow but still lag behind pre-pandemic levels.
• Box 2: Kuwait is seeking to boost capacity after experiencing significant losses.
• Box 3: US LTO (Light Tight Oil) production is increasing, with rigs and returns showing positive trends.
• Box 4: End-user product prices vary by country, with some experiencing higher increases than others.