The OPEC expects oil demand in 2023 to reach pre-pandemic levels, touching around 102 million bpd, according to the Secretary General of the group.

In the most recent monthly report, the group raised forecasts for demand growth in the current year for the first time in several months, taking optimism from the reopening of China and strength in the broader East of Suez markets.

The producer group has however been cautious with respect to the downside risks that continue to prevail, including the threat of interest rate hikes and inflation eating into demand. These concerns are likely to prevent the group and partner countries in the OPEC+ from changing the output plans but instead wait and watch the summer gasoline demand before taking a call.

The Dubai Brent EFS spread remained nearly flat through the week but has fallen since the start of the year. The spread is likely to remain narrow as demand for vacuum gasoil (VGO), an intermediate stream used as secondary feedstock increases in refineries, creating a stronger demand for medium crudes. Demand for ME crudes are also expected to remain strong, keeping the Dubai complex supported.

China's UNIPEC is reported to have bought about 7.5 million bbl of April loading Upper Zakum crude oil according to Reuters. This follows the purchase of 8.5 million bbl of Mar loading cargoes of the grade. The stronger buying by Chinese trading houses has put the spotlight on the improving demand in the country.

Refining sector highlights

The refinery maintenance season in Q1 2023 is expected to be higher than average and demand for crude is expected to be muted but will return in time for the summer driving season, as refiners ramp up unit throughputs to meet gasoline demand globally. With the month of Ramadan beginning in late March, driving demand in Asia and the Middle East would pick up before the US summer driving season. Jet demand is expected to be strong on the back of summer international travel and is likely to make refiners increase the Jet yield from Diesel.

Weekly crude oil exports from the Middle East and North Africa (MENA) were lower at 127.5 million bbl and 13.1 million bbl respectively. Saudi Aramco is reported to have informed at least 4 North Asian buyers that full contractual volumes would be supplied in March.

(Writing by Sudharsan Sarathy; editing by Seban Scaria seban.scaria@lseg.com )