Standard Chartered: The Risk Of Negative Oil Demand Growth Is Rising
Standard Chartered analysts are now forecasting a reduction in global oil demand of over 400,000 bpd year-over-year in the fourth quarter amid increasingly bearish fundamentals. China is not likely to “turbo-charge” oil demand growth, according to Standard Chartered. “Oil prices have strengthened recently, partly on hopes that China will reopen its economy and cause a rapid turnaround in oil demand growth. We think positivity may be premature given the likely slow pace of reopening and the potential for further demand downgrades,” writes Standard Chartered in its November 8 report. Last week, completely unsubstantiated social media reports suggesting that Beijing was preparing to ease its zero-COVID policy immediately caused Chinese stocks to soar and pushed oil prices up, despite the fact that there was no confirmation from Beijing. On the same day, Bloomberg cited a Chinese health official as saying that Beijing would “resolutely” adhere to its zero-COVID policy amid rising case numbers. Standard Chartered also points out that “one of China’s largest oil companies” has estimated that the country’s domestic demand has fallen by more than 1 million barrels per day YoY year-to-date. That is very different from the Energy Information Agency’s (EIA) forecasts, which see a drop of only 32,000 barrels per day y/y for the full year, based on its October report. In its November 8 report, the EIA cut its world oil demand growth forecast for next year by 320,000 bpd to 1.16 million bpd, but raised 2022 oil demand growth by 140,000 bpd to 2.6 million bpd. The numbers from “one of China’s largest oil companies are also significantly higher than OPEC’s forecast of a 60,000 bpd drop in demand y/y for the full year.” “The slowing of global demand has been so pronounced that China alone (15% of total demand) is unlikely to reverse it,” writes Standard Chartered. India’s October oil demand has come in at 110,000 b/d below Standard Chartered’s forecast of 4.778 million bpd, and year-on-year growth was at an 8-month low. Standard Chartered’s forecast now shows a rather bearish global oil demand growth of 1.216 million barrels per day in 2023. Even that projection comes with caveats, as the analysts see “significant downside risk, particularly in the OECD”, where it forecasts growth of 128,000 bpd next year – down from 1.24 million bpd growth this year. “The risk of negative growth appears to be increasing,” Standard Chartered warns.
As India becomes top importer of Russian oil, US says not planning sanctions
The United States does not currently have sanctions in place against Russian energy exports to other countries, Pakistan newspaper Dawn reported citing a US State Department official. The report comes as Russia became India’s top oil supplier in October, and Pakistan is seeking energy supplies from Russia at a discount. “The United States does not currently have sanctions in place against Russian energy exports to other countries,” a US State Department spokesperson, who has been unnamed, told Dawn. The spokesperson said that the decision to ban Russian energy imports has been left to the individual countries, hoping that they would take an appropriate decision based on their own circumstances. “We continue to coordinate with allies and partners, including India and European allies and partners, to mitigate the impact of (President Vladimir) Putin’s war of aggression against Ukraine on global energy markets,” the spokesperson added.
India’s October fuel demand rises 3.4% year-on-year
India’s fuel consumption, a proxy for oil demand, rose 3.4% year-on-year in October to 18.37 million tonnes, data from the Petroleum Planning and Analysis Cell (PPAC) of the Oil Ministry showed on Monday. Sales of gasoline, or petrol, were 8.8% at 2.99 million tonnes. Cooking gas or liquefied petroleum gas (LPG) sales decreased 3.3% to 2.40 million tonnes, while naphtha sales fell 24% to 0.96 million tonnes. Sales of bitumen, used for making roads, were 11.5% lower, while fuel oil use edged up 0.9% in October.