Morgan Stanley ups 2023 oil demand growth estimate by 36%, flags Russia risk

By pointing to increasing momentum in China’s economy and a rebound in aviation, Morgan Stanley has increased its projection for this year’s global oil demand growth by approximately 36%. But, it has also noted greater production from Russia as an offsetting factor.

The bank stated in a report dated Tuesday that it is now anticipated that global oil consumption will rise by around 1.9 million barrels per day (bpd), as opposed to its previous projection of 1.4 million bpd.

“Mobility indicators for China, such as congestion, have been rising steadily,” while “flight schedules have firmed-up the outlook for jet fuel demand,” the bank said.

But supply from Russia has been stronger than expected, leading to a slightly smaller than previously assumed deficit in the second half of the year, analysts at the bank wrote, trimming their Brent oil price forecast for that period to $90-100 a barrel from $100-110 previously.

“We previously estimated a ~1 mb/d year-on-year decline in 2023, which we moderate to 0.4 mb/d,” the bank said, referring to its Russian output outlook in million barrels per day.

Goldman Sachs boosted its 2023 and 2024 global supply predictions while decreasing its 2023 Brent price forecast earlier this month. The most noticeable upward revisions were made by Russia, Kazakhstan, and the United States.

Nevertheless, Goldman also pointed out that this year’s increase in Chinese demand of 1.1 million bpd should force oil markets back into a deficit in June.