The latest IEA Oil Market Report (OMR) notes that Global oil demand growth is losing momentum, with annual gains easing from 2.8 mb/d in 3Q23 to 1.8 mb/d in 4Q23.
IEA also reported a sharp drop in China underpinned an 830 kb/d decline in global oil demand to 102.1 mb/d in the last quarter of 2023. The pace of expansion will probably decelerate further to 1.2 mb/d in 2024. China, India and Brazil will continue to dominate gains, IEA predicts.
World oil supply in January posted a sharp decline of 1.4 mb/d m-o-m after an Arctic blast shut in production in North America and as OPEC+ deepened output cuts. For 2024 as a whole, refinery crude runs are likely to rise by 1 mb/d to 83.3 mb/d, as a 330 kb/d decline in the OECD mitigates non-OECD gains.
Furthermore, refining margins recovered from early-January weakness in the Atlantic Basin, led by the US Gulf Coast following the mid-month winter freeze.
Although Singapore margins posted a narrow m-o-m gain, the $4.50/bbl increase on average in USGC margins was driven by the late-month rally in cracks that pushed Atlantic Basin margins to their highest level since late September.
Additionally, amid intensifying hostilities in the Middle East and North American supply outages, ICE Brent futures rose by $5/bbl during January – their first monthly gain since September.
The forward structure flipped from contango to backwardation, as diverted Red Sea tanker traffic congested Asia-Europe supply chains and delayed flows into the Atlantic Basin.
