Canadian Supply Expected To Climb For 2023

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Canadian oil supply is expected to top six million bbls/d in 2023, with output climbing in the back half of 2022 and into the new year, the International Energy Agency (IEA) reported in its June Oil Market Report.

Output is expected to hit 6.01 million bbls/d in 2023, up from 5.83 million in 2022, the agency forecast.

World oil demand is forecast to reach 101.6 million bbls/d in 2023, surpassing pre-pandemic levels, the IEA stated in its report.

While higher prices and a weaker economic outlook are moderating consumption increases, a resurgent China will drive gains next year, with growth accelerating from 1.8 million in 2022 to 2.2 million bbls/d in 2023. In contrast to 2022 when the OECD led the expansion, non-OECD economies are set to account for nearly 80 per cent of growth next year.

Non-OPEC+ is set to lead world supply growth through next year, adding 1.9 million bbls/d in 2022 and 1.8 million bbls/d in 2023. As for OPEC+, total oil output in 2023 may fall as embargoes and sanctions shut in Russian volumes and producers outside the Middle East suffer further declines. Assuming Libya rebounds from a steep drop, the bloc’s production could increase 2.6 million bbls/d this year, eroding its spare capacity cushion.

On the refining side, product markets are expected to remain tight, with a particular concern for diesel and kerosene supplies, said the IEA. While diesel cracks eased month-on-month in May, both jet fuel and gasoline cracks surged as demand picked up seasonally.

Following nearly two years of declines, observed global oil inventories increased by 77 million bbls in April. OECD industry stocks also rose, by 42.5 million bbls (1.42 million bbls/d), helped by government stock releases of nearly one million bbls/d. At 2.669 billion bbls, OECD industry stocks were nevertheless 290.3 million bbls below the 2017-2021 average. Preliminary data for May show total OECD stocks building by six million bbls.

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