OPEC forecasts oil demand after changes in oil production policy
The Organization of the Petroleum Exporting Countries maintained an optimistic outlook for oil demand growth after setting out a plan to phase out some production cuts, raising concerns about whether the market can absorb the extra barrels.
The Vienna-based cartel said in its monthly report it forecast oil demand to rise by 2.2 million barrels a day in 2024 and 1.8 million barrels a day in 2025, unchanged from its previous estimates. In the second half of this year, oil demand is projected to grow by an average of 2.3 million barrels per day.
Jet fuel and gasoline are expected to be the main drivers of demand during the summer travel season in OECD countries, OPEC said. Outside the OECD, China is expected to lead demand growth, supported by a recovery in air travel and an improving manufacturing sector.
Tuesday's report comes as Brent crude trades around $81 a barrel and West Texas Intermediate crude trades at around $77 a barrel. Both benchmark oil indexes rose about 3% on Monday on expectations that summer fuel demand and production cuts by OPEC and its allies will leave the market in a significant deficit in the third quarter.
However, analysts say a more sustainable economic recovery will require fundamentally supportive news such as lower borrowing costs. Last week, OPEC+'s plan to gradually bring some production back into the market later this year triggered a sell-off in oil, adding to bearish sentiment that oil has been experiencing for months, including on the prospect of higher, longer-term U.S. interest rates.
"Crude oil futures fell as speculative sell-offs, expectations of easing geopolitical risks, monetary policy uncertainty from central banks and mixed economic indicators weighed on market sentiment," OPEC said. “Speculative sell-offs throughout the month contributed to lower prices and increased market volatility.”
Total OPEC crude oil production rose 29,000 barrels per day to 26.63 million barrels per day in May, the cartel said, citing secondary sources. Nigeria's oil production rose by 74,000 barrels per day to 1.42 million barrels per day, while Saudi Arabia's production fell by 32,000 barrels per day to 9 million barrels per day.
A group of oil-producing countries agreed earlier this month to extend all production curbs into next year. It decided to extend a voluntary 2.2 million barrel-a-day production cut until the end of September and said it intended to phase it out from October 2024 to September 2025, raising concerns about a glut next year.
OPEC kept its estimates for growth in supplies from countries outside the Declaration of Cooperation (officially known as OPEC+) at 1.2 million barrels per day in 2024, saying the main drivers of growth are expected to be the United States, Canada and Brazil. and Norway. The production growth forecast for 2025 was also maintained at 1.1 million barrels per day.
The group reaffirmed its forecast for global economic growth of 2.8% this year and 2.9% next year and left its growth estimates for the US and eurozone unchanged at 2.2% and 0.5% in 2024 and 1.9% and 1.2% in 2025. , respectively.
“A move to more accommodative monetary policy by major central banks is expected in the second half of 2024 and throughout 2025, particularly in the US, eurozone and UK, which could also support global growth in the near term,” it said. .
OPEC said economic growth remained stable in the first half of the year, helped by better-than-expected performance in non-OECD countries. In the second half of the year, growth will be supported by global travel and tourism, as well as a gradual increase in industrial production in OECD countries.
The International Energy Agency is due to release its monthly oil report on Wednesday. The Paris agency's current forecasts are significantly lower than those of OPEC: oil demand growth is estimated at 1.1 million barrels per day this year and 1.2 million barrels per day next year.
(11:30 GMT) *OPEC maintains global oil demand growth forecast in 2024 at 2.2 million barrels per day
(11:30 GMT) *OPEC forecasts global oil demand growth to average 2.3 million barrels in day in the second half of the year
(11:30 GMT) *OPEC maintained its forecast for global oil demand growth in 2025 at 1.8 million barrels per day
(11:30 GMT) *OPEC maintained its forecast for global economic growth for 2024 at 2 .8%
(11:30 GMT) *OPEC maintained its forecast for global economic growth in 2025 Forecast at 2.9%
(11:30 GMT) *OPEC maintained its forecast for US economic growth in 2025 at 1.9%
(11 :30 GMT) *OPEC maintained Eurozone economic growth forecast for 2024 at 0.5%
(11:30 GMT) *OPEC maintained forecast for 2024 US economic growth forecast at 2.2%
(11:30 GMT) * OPEC maintains eurozone economic growth forecast for 2025 at 1.2%
(11:30 GMT) *OPEC maintains non-DoC supply growth forecast at 1.2 million barrels per day in 2024
(11:30 GMT) * OPEC maintains non-DoC supply growth forecast at 1.1 million bpd in 2025
(11:30 GMT) *OPEC: non-DoC countries not participating in Declaration of Cooperation
(11:30 GMT) * Production OPEC oil rose 29,000 bpd in May to 26.63 million bpd, OPEC reports, citing secondary sources
(11:30 GMT) *Nigerian oil production rose 74,000 bpd in May to 1. 42 million bpd, OPEC Citing secondary sources
(11:30 GMT) * Saudi Arabia's oil production fell by 32,000 bpd in May to 9 million bpd, OPEC said, citing secondary sources
(11: 30 GMT) OPEC maintains optimistic forecasts for oil demand after shifting withdrawal policy.