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

"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.

Feb 22, Reuters

Morgan Stanley has raised its global oil demand growth estimate for this year by about 36%, citing growing momentum in China's reopening and a recovery in aviation, but flagged higher supply from Russia as an offseting factor.

Global oil consumption is now expected to increase by about 1.9 million barrels per day (bpd), versus its previous 1.4 million bpd forecast, the bank said in a note dated Tuesday.

"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.

Earlier this month, Goldman Sachs cut its 2023 Brent price forecast and raised its global supply forecasts for 2023 and 2024, with Russia, Kazakhstan and the United States the most notable upward adjustments.

But Goldman also noted that a 1.1 million bpd rise in Chinese demand this year should push oil markets back into a deficit in June.