Opec upbeat on global oil demand growth

Group forecasts oil demand to grow by 2.2 million barrels a day this year


Issac John

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Published: Tue 14 May 2024, 8:32 PM

Last updated: Tue 14 May 2024, 9:14 PM

Opec left its global oil-demand growth forecast unchanged for this year and next as it expects additional upside potential in the second half for a resilient global economy with the possible easing of monetary policies.

The 12-nation group said in a report that it continues to forecast oil demand to grow by 2.2 million barrels a day this year and by 1.8 million barrels a day in 2025 while reporting a fall in crude output as the market awaits the group’s next production policy move at its upcoming meeting in June.

The Vienna-based body said its crude oil production fell by 48,000 barrels a day to 26.575 million barrels a day in April. It estimates that global oil demand rose by 2.4 million bpd in the first quarter of 2024. For the full year, total world oil demand is anticipated to reach 104.5 million bpd, driven by “strong air travel demand and healthy road mobility, including trucking, as well as industrial, construction, and agricultural activities in non-OECD countries.”

“The global economy showed resilience in 1Q24, with key economies demonstrating stable growth that, in certain instances, surpassed initial projections,” Opec said.

The organisation kept its world economic growth forecasts for 2024 and 2025 at 2.8 per cent and 2.9 per cent, respectively, but slightly raised its estimates of the US economy this year and next. Opec now expects the US economy to grow by 2.2 per cent this year, up from 2.1 per cent in last month’s report, and by 1.9 per cent next year, up by 0.2 percentage points compared to the April assessment.

“Despite certain downside risks, the continued momentum observed since the start of the year could create additional upside potential for global economic growth in 2024 and beyond,” the report said.

Oil prices were little changed on Tuesday, as the group stuck to its global oil demand forecasts and investors waited on US inflation indicators this week.

Brent crude futures fell 9 cents to $83.27 a barrel at 1102 GMT, while U.S. West Texas Intermediate (WTI) crude futures also lost 9 cents to $79.03 a barrel.

On Monday, Brent marked its biggest daily gain in more than two weeks, and WTI in more than a month, on signs of improving demand in the U.S. and China, the world's top two oil consumers.

Supply from producers outside of Opec+ — made up of Opec and its Russia-led allies — is expected to grow by 1.2 million bpd in 2024, driven largely by the US, Brazil, Canada and Norway. Output growth in 2025 is seen at 1.1 million bpd, also broadly unchanged from the April outlook.

To support the market, Opec+ has implemented a series of output cuts since late 2022. The latest cut of 2.2 million bpd is in place until the end of June unless it is extended, as some Opec+ sources have said it could be.

The International Energy Agency, which represents industrialised countries and forecasts oil demand will peak by 2030, sees an expansion of 1.2 million bpd and is scheduled to update its figures today.

Opec believes oil use will keep rising for the next two decades and has not forecast a peak.

The Saudi-led oil producers’ group also said it would stop publishing a calculation of the world's demand for its own crude - a figure watched as an indicator of market strength - and would focus on demand for oil from Opec+.

The move "demonstrates solidarity and unity" within the Opec+ framework, it said, as well as removing the "potential for misunderstanding." Opec+ has been working together since 2016 through a pact called the Declaration of Cooperation (DoC).

In the report, Opec projected 2024 demand for DoC crude at 43.2 million bpd, compared with world oil demand of 104.5 million bpd, and said the group produced 41.02 million bpd in April, below the expected demand.

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