“Mobility indicators in China, such as congestion, have been increasing steadily,” the bank said.
Morgan Stanley raised its estimate of growth in global oil demand for this year to around 36%. For this he cited the growing momentum of the Chinese reopening and the recovery of aviation, but pointed to the increase in Russian supply as a compensating factor.
World crude oil consumption is now expected to increase by around 1.9 million barrels per day (bpd), compared to its previous forecast of 1.4 million bpd, the bank said in a note dated Tuesday the 21st.
It was detailed that “mobility indicators in China, such as congestion, have increased steadily,” while “flight schedules have strengthened the outlook for jet fuel demand.”
However, Russian supply has been stronger than expected, leading to a somewhat smaller-than-expected deficit in the second half of the year, the bank’s analysts wrote, recalling their Brent price forecast for that period at US $90-$100 per barrel from the previous $100-$110.
“Previously, we estimated a ~1 mb/d yoy decline in 2023, which we moderated to 0.4 mb/d,” the bank said, referring to its Russian production outlook in million barrels per day.
This month, Goldman Sachs (NYSE:GS) cut its Brent price forecast for 2023 and raised its global supply forecasts for 2023 and 2024, with Russia, Kazakhstan and the United States the most notable upward adjustments. He also indicated that a 1.1 million bpd increase in Chinese demand should push oil markets back into deficit in June.
Oil prices fell for the third straight session on Wednesday, with benchmark Brent trading around $82.75 a barrel. However, expectations of lower global supply and increased demand from China cushioned the general weakness in prices.
With information from Reuters.
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