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Global oil demand to surpass pre-pandemic levels next year-FORECAST

11 January 2023 10:58 (UTC +04:00)

Based on the S&P Global macroeconomic model, U.S. real GDP is to grow by 0.5% in 2023, with economic growth returning after a contraction in the first quarter of 2023 (1Q23) and 2Q23, APA-Economics reports citing the monthly report of IEA.

In 2024, real GDP will grow by 1.9%, driven primarily by an increase in household consumption. Relatively flat economic growth in 2023 results in total U.S. energy consumption falling by 0.9% in our forecast. Total energy consumption then rises by 1.0% in 2024.

Global production of liquid fuels, in our forecast, reaches an average of 102.8 million barrels per day (b/d) in 2024, up from 100.0 million b/d in 2022, driven by large growth in non-OPEC production. However, uncertainty over Russia’s oil supply will persist, particularly in early 2023. We expect that global consumption of liquid fuels will increase from an average of 99.4 million b/d in 2022 to 102.2 million b/d in 2024. Ongoing concerns about global economic conditions, as well as the easing COVID-19 restrictions in China, however, increase the uncertainty of the outcomes of our demand forecasts. With more global oil production than consumption in our forecast, we expect global oil inventories will increase over the next two years.

Brent crude oil price will average $83 per barrel (b) in 2023, down 18% from 2022, and continue to fall to $78/b in 2024 as global oil inventories build, putting downward pressure on crude oil prices.

Gasoline prices decline in our forecast as both wholesale refining margins and crude oil prices fall. We forecast U.S. gasoline refining margins will fall by 29% in 2023 and fall by 14% in 2024, leading to retail gasoline prices averaging around $3.30 per gallon (gal) in 2023 and $3.10/gal in 2024.

U.S. refining margins for diesel will fall by 20% in 2023 and by 38% in 2024. We expect retail diesel prices to average about $4.20/gal in 2023, down 16% from 2022. In 2024, we expect prices to continue to fall and average near $3.70/gal.