OPEC Cuts Global Oil Demand Forecast for 2024

The Organization of the Petroleum Exporting Countries (OPEC) has slightly downgraded its global crude oil demand forecast for 2024, citing weaker consumption in China.

World oil demand growth for 2024 is now projected to increase by 2.1 million barrels per day, a slight decrease of 135,000 barrels per day from the previous month’s estimate. This figure remains significantly higher than the historical average of 1.4 million barrels per day recorded before the COVID-19 pandemic.

OPEC attributed today’s downward revision to actual data for the first and second quarters of 2024 and tempered expectations for China’s oil demand growth this year.

Oil demand in OECD countries is anticipated to rise by approximately 0.2 million barrels per day in 2024, while non-OECD demand is projected to increase by around 1.9 million barrels per day.

For 2025, world oil demand is also slightly downgraded by 65,000 barrels per day, reaching approximately 1.8 million barrels per day. OECD demand is expected to expand by about 0.1 million barrels per day in 2025, with the largest increase coming from OECD Americas.

Non-OECD demand is poised to drive growth next year, increasing by about 1.7 million barrels per day, primarily due to contributions from China, the Middle East, Other Asia, and India.

Between January and April, oil futures prices surged, with ICE Brent and NYMEX WTI front-month contracts rising by 12.4% and 14.3%, respectively.

According to the OPEC report, these price increases were fueled by robust physical crude market fundamentals, reduced speculative selling, increased risk premiums, and several unplanned supply disruptions. Additionally, resilient global economic growth and positive economic indicators from the United States and India supported market sentiment. However, uncertainties surrounding China’s economic outlook, the U.S. Federal Reserve’s monetary policy, and a strengthening U.S. dollar tempered upward momentum.

Oil prices declined between May and July, primarily driven by speculative selloffs, decreasing geopolitical risk premiums, and mixed economic indicators. Market sentiment was further impacted by uncertainty surrounding central bank monetary policies, particularly concerns about prolonged high interest rates in the U.S. to combat inflation. Furthermore, worries about China’s economic performance and demand growth, combined with a slower-than-expected start to the driving season, contributed to downward pressure on prices, according to OPEC.