OPEC Revises Oil Demand Forecast for 2024 Due to China’s Lower Intake
The Organization of the Petroleum Exporting Countries (OPEC) has slightly revised down its global crude oil demand forecast for 2024. The adjustment, a reduction of 135,000 barrels per day, is due to softer oil demand from China. The new forecast predicts a growth of 2.1 million barrels per day, which is still above the historical average of 1.4 million barrels per day seen before the COVID-19 pandemic.
OPEC’s revision is based on actual data from the first and second quarters of 2024 and reflects lower expectations for China’s oil demand growth. In 2024, oil demand from OECD countries is expected to grow by around 0.2 million barrels per day, while non-OECD countries will see an increase of about 1.9 million barrels per day.
Looking ahead to 2025, world oil demand is also revised slightly down by 65,000 barrels per day, reaching about 1.8 million barrels per day. OECD demand is expected to expand by about 0.1 million barrels per day, with the largest increase coming from OECD Americas. Non-OECD demand is set to drive next year’s growth, increasing by about 1.7 million barrels per day, led by contributions from China, the Middle East, Other Asia, and India.
Between January and April, oil futures prices rallied, with ICE Brent and NYMEX WTI front-month contracts rising by USD 9.85 and USD 10.53, or 12.4% and 14.3%, respectively. This was due to robust physical crude market fundamentals, easing speculative selling, higher risk premiums, and several unplanned supply outages. Resilient global economic growth and positive economic indicators from the US and India also supported market sentiment.
However, uncertainties related to China’s economic outlook, the US Fed’s monetary policy, and a strengthening US dollar limited the upward momentum. Between May and July, oil prices declined due to speculative selloffs, easing geopolitical risk premiums, and mixed economic indicators. Market sentiment was further affected by uncertainty surrounding central bank monetary policies, particularly the prospects for prolonged high interest rates in the US to address ongoing inflation. Concerns about China’s economic performance and demand growth, along with a slower-than-expected onset of the driving season, also contributed to the downward pressure on prices.
Doubts Revealed
OPEC -: OPEC stands for the Organization of the Petroleum Exporting Countries. It is a group of countries that produce a lot of the world’s oil and work together to manage oil production and prices.
Crude oil -: Crude oil is a type of oil that is taken directly from the ground. It is used to make many products like petrol, diesel, and other chemicals.
Forecast -: A forecast is a prediction or estimate of what will happen in the future. In this case, it is about how much oil people will need.
Barrels per day -: Barrels per day is a way to measure how much oil is produced or used each day. One barrel is equal to about 159 liters.
OECD -: OECD stands for the Organisation for Economic Co-operation and Development. It is a group of countries that work together to improve the economy and well-being of people around the world.
Non-OECD countries -: Non-OECD countries are those that are not part of the OECD group. These countries are usually developing or emerging economies.
Economic indicators -: Economic indicators are statistics that show how well a country’s economy is doing. Examples include the unemployment rate, inflation rate, and GDP.
Speculative selloffs -: Speculative selloffs happen when investors sell a lot of their investments quickly because they think the prices will go down. This can cause prices to drop even more.
