IEA cut 2022 crude demand growth estimate by 100,000 barrels per day amid economic weakness in China, slowdown in OECD countries
COMMODITIES DATA VIEWS & ANALYSIS
IEA cut 2022 crude demand growth estimate by 100,000 barrels per day amid economic weakness in China, slowdown in OECD countries
COMMODITIES DATA VIEWS & ANALYSIS

IEA cut 2022 crude demand growth estimate by 100,000 barrels per day amid economic weakness in China, slowdown in OECD countries

 

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Global oil demand continues to lose momentum due to China’s economic weakness and a slowdown in countries of the Organization for Economic Cooperation and Development, the International Energy Agency said in a report on Sept. 14, cutting its 2022 demand growth estimate by 100,000 barrels per day.

Global supply had risen for a third straight month in August and is set to outpace demand through to the second quarter of 2023, it said, raising its annual supply growth estimates for 2022 and 2023 by 50,000 b/d and 40,000 b/d, respectively.

Lowering demand growth estimate for 2022 to 2 million b/d, the IEA noted demand had found some support from high gas prices prompting a switch from gas to oil in power generation and refinery operations, estimating the impact at 700,000 b/d in Q4 2022 and Q1 2023 compared with normal seasonal trends.

However, “Global oil demand remains under pressure from the faltering Chinese economy and an ongoing slowdown in OECD economies,” the IEA said. “[Year-on-year] growth continues to lose momentum, slowing from 3.5 million b/d in H1 22 to only 1.1 million b/d in Q3 22, before grinding to a halt in Q4 22.”

The IEA highlighted the slump in Brent futures since June, including a 65% fall in backwardation in the three months from a June peak. Noting the role of seasonal factors and increased supply, it said “the global economy is on the cusp of a recession,” while adding that diesel and jet fuel markets remain “exceptionally tight.”