The surplus, which the report describes as “politically created surplus”, is already ending, driven by the ongoing recovery in Chinese demand.
“Chinese demand is recovering, but we remain conservative on further normalization. Government pressure to deliver robust growth this year is therefore leaving risks to our lowered Chinese demand forecast, which has turned upward,” the statement said. report.
It will be downgraded in the future
“Given our already cautious demand expectations for China at the start of this year, this reflects the view that advancing lockdowns will continue to be a headwind for mobility (in the country) this year.”
In the meantime,
“The structural oil deficit therefore remains unresolved, with in fact an even tighter oil market through April than we anticipated. Supply remains inelastic to higher prices, with production shifts in core OPEC (higher) and exempt countries (lower) largely offsetting.”
On the demand side, the report argues that negative global growth momentum remains insufficient to rebalance inventories at current prices.
As supply and demand forecasts are updated, the report now predicts that Brent prices will need an average of $135 a barrel in the second half of 2022 and the first half of 2023 to finally normalize inventories by the end of 2023.
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