For the second consecutive month, OPEC slightly cut its forecast for 2024 global crude oil demand in its September Oil Market Report published Tuesday.
The cartel had held firm to its initial 2024 forecast, first published in July 2023, until August, when it revised projections down from 2.25 million barrels of oil per day (bpd) to 2.11 million bpd. September’s revision drops the forecast to 2.03 million, still well above the competing forecasts published by the International Energy Agency (IEA) and U.S. Energy Information Administration (EIA).
OPEC attributed its downward August revision to actual data for Q1 and Q2 of this year, as well as reports of slowing economic growth in China. But the September report expresses no further concern related to China, saying, “Looking ahead, China’s economic growth is expected to remain well supported.” To support that proposition, the report adds expectations that stronger growth forecasts for India, Russia, and Brazil will more than offset any further slowing in China.
Instead, OPEC attributes the September revision to other factors, saying, “headwinds in the real estate sector and the increasing penetration of LNG trucks and electric vehicles are likely to weigh on diesel and gasoline demand going forward.”
Despite that forward-looking statement related to demand penetration by LNG trucks and EVs, OPEC foresees only a modest reduction in 2025 demand growth, revising its prior forecast of 1.78 million bpd to 1.74 million. “Non-OECD demand is set to drive next year’s growth, increasing by about 1.6 mb/d, led by contributions from China, the Middle East, Other Asia, and India,” the report says. “OECD demand is forecast to expand by about 0.1 mb/d, with OECD Americas contributing the most.”
OPEC’s September report makes no changes to projected global supplies for either 2024 or 2025, estimating growth at 1.2 million bpd and 1.1 million bpd for those years, respectively. It cites the US, Brazil, Canada, and Norway as the areas likely to account for most of the growth.
The Bottom Line
This month’s report from OPEC comes after a month that has seen the international Brent price for crude fall by 15% as traders seem to be pricing in anticipations of a slowing economy, along with expectations that the larger OPEC+ group will begin the process of unwinding some of its voluntary production and export cuts in the fourth quarter of the year.
It remains to be seen if a continuing softening of global demand will influence OPEC+ to delay efforts to raise supply.
David Blackmon for Forbes
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