VIENNA - The world oil demand growth forecast for 2024 is revised down slightly by 135 tb/d from the previous month’s assessment, according to the OPEC monthly Oil Market report.
It now stands at a healthy 2.1 mb/d, well above the historical average of 1.4 mb/d seen prior to the COVID-19 pandemic.
This slight revision reflects actual data received for 1Q24 and in some cases 2Q24, as well as softening expectations for China’s oil demand growth in 2024.
Within the main regions, OECD oil demand is expected to grow by around 0.2 mb/d in 2024, while non-OECD oil demand is expected to increase by around 1.9 mb/d.
In 2025, world oil demand is also revised slightly down by 65 tb/d, reaching about 1.8 mb/d.
OECD demand is expected to expand by about 0.1 mb/d in 2025, with OECD Americas contributing the largest increase.
Non-OECD demand is set to drive next year’s growth, increasing by about 1.7 mb/d, led by contributions from China, the Middle East, Other Asia, and India.
The oil futures market
Oil futures exhibited volatility in July, although the average price increased m-o-m. Early in the month, prices extended the previous month’s gains, driven by weather-related concerns as the Atlantic hurricane season commenced earlier than usual.
The intensification of Hurricane Beryl to a Category 5 storm exacerbated fears
of potential disruptions to the US Gulf of Mexico’s crude production and refining activities.
Moreover, optimism about increased oil demand during the US summer driving season, coupled with supportive inventory data from the EIA, contributed to the upward price momentum. EIA weekly data showed a larger decline in US crude
and petroleum product stocks in July. Geopolitical developments in the Middle East further buoyed oil prices.
However, oil prices reversed course in the second week of July as supply risk concerns eased following the limited impact of Hurricane Beryl on crude oil production and refinery activity in Texas after it made landfall on 8 July.
Waning refining margins, particularly in Asia and Europe, combined with slower-than-expected Chinese economic growth, dampened market optimism. China’s National Bureau of Statistics reported a real GDP growth rate of 4.7%, y-o-y, in 2Q24, down from 5.3% in 1Q24.
Aggressive selling by speculators, including hedge funds and other money managers, amplified the price decline. In July, a reduction in net long positions
of 60% in Brent futures and options, was equivalent to a sale of 118 million barrels.
Geopolitical developments and a broader retreat in major US equity markets in the third week of July weighed on market sentiment.
Towards the end of the month, oil futures rebounded, driven by renewed geopolitical risk premiums.
A report from the EIA indicating a further decline in US crude and gasoline inventories bolstered market sentiment and provided additional support to oil futures.
