The Organisation of the Petroleum Exporting Countries (OPEC) has revised its forecast for global oil demand growth in 2024, citing softer expectations for China as the main reason. This adjustment highlights the challenge faced by the OPEC+ group in increasing production from October. Following this update, oil prices fell on Tuesday, ending a five-day winning streak. Global benchmark Brent crude futures dipped to $81.52 a barrel, while US West Texas Intermediate crude futures slid to $79.33 a barrel.
The International Energy Agency (IEA) projects much lower demand growth for oil in 2024 compared to OPEC, estimating it at 970,000 barrels per day. The IEA maintained its global oil demand growth forecast for 2024 but reduced its 2025 estimate due to reduced consumption in China. Despite concerns over China’s weaker-than-expected demand, advanced economies like the US are offsetting this decline by maintaining strong gasoline consumption levels, according to the IEA.
OPEC’s latest market outlook reflects growing concerns about China’s demand and economic challenges. The end of China’s post-Covid economic recovery is limiting global oil demand, but advanced economies are helping to balance the market. The report also mentions uncertainties ahead of the US inflation data release, which could impact oil prices. OPEC’s decision to ease production cuts starting in October may suggest a less tight oil market in the future.
In its monthly report, OPEC predicted a global oil demand increase of 2.11 million barrels per day in 2024, down from the previous month’s estimate of 2.25 million barrels per day. Market analysts note a wide split in demand growth forecasts for 2024 due to differences in China’s demand and the transition to cleaner fuels worldwide. This year’s demand growth remains above the historical average seen prior to the pandemic, with robust summer travel demand expected.
OPEC also adjusted next year’s demand growth estimate to 1.78 million barrels per day, highlighting the uncertainty surrounding future oil demand. Recent concerns about Chinese demand and a possible US recession caused oil prices to drop near $75 per barrel, but prices have since stabilized above $80. OPEC+ plans to start unwinding output cuts in October, with the possibility of pausing or reversing the decision if needed.
The alliance will monitor oil market data in the coming weeks to make informed decisions about production levels. Actual production is increasing, with OPEC+ pumping 40.9 million barrels per day in July, led by an increase from Saudi Arabia. The report projects demand for OPEC+ crude at 43.8 million barrels per day in the fourth quarter, indicating potential for higher production by the group. As global oil demand trends continue to evolve, OPEC and its allies face ongoing challenges in balancing production levels to meet market demand.
