In its latest oil market report, OPEC maintained its previous forecasts for global economic growth and oil demand for 2024 and 2025.
OPEC raised its prediction for second-quarter 2024 oil demand by 50,000 barrels per day but lowered its first-quarter forecast by the same amount. The overall growth forecast for global oil demand in 2024 remains unchanged at 2.2 million barrels per day.
OPEC anticipates that in the second half of this year, global oil demand will average an increase of 2.3 million barrels per day compared to the same period last year, consistent with last month's forecast and 150,000 barrels per day higher than the first half. In 2024, oil demand is expected to average 104.5 million barrels per day.
For 2025, OPEC's forecast for global oil demand growth remains at 1.8 million barrels per day.
OPEC predicts that jet fuel and gasoline will be the primary drivers of demand in OECD countries during the peak summer travel season. Outside the OECD, China is expected to lead demand growth, driven by a recovery in air travel and improvements in manufacturing.
Following the report's release, oil prices initially fell but later recouped some losses.
Analysts note that for oil prices to achieve a more sustained recovery, support from fundamental factors is necessary. Last week, reports indicated that OPEC+ had reached a preliminary agreement to extend its production cut policy until 2025, with voluntary additional cuts to be gradually phased out starting in September.
This news triggered a sell-off in the oil market, exacerbating the bearish sentiment that has persisted for several months.
In its report, OPEC highlighted that speculative selling, easing geopolitical risks, uncertainties in central bank monetary policies, and mixed economic indicators have weighed on market sentiment, leading to declines in crude oil futures prices. Speculative selling throughout May led to price drops and increased market volatility.
OPEC: Plans to Boost Supply, Assures Market Stability
On the supply side, OPEC maintained its forecast for oil supply growth of 1.2 million barrels per day from non-OPEC+ countries in 2024, with the primary contributors being the United States, Canada, Brazil, and Norway. The forecast for 2025 remains at an increase of 1.1 million barrels per day.
OPEC also asserted that OPEC+ can resume or increase oil supply without disrupting the global oil market or causing a buildup in oil inventories.
Specifically, OPEC expects that in the third quarter, the 22-member alliance will need to supply 43.6 million barrels per day, which is approximately 2.7 million barrels per day higher than their output last month.
This projection underscores OPEC's optimism about the recovery and growth of global oil demand, with confidence that the market can absorb additional supply without triggering a price collapse or inventory surplus.
OPEC's demand forecast remains significantly higher than those of other agencies. The International Energy Agency (IEA), which is set to release its oil market report on Wednesday, currently predicts a demand growth of only 1.1 million barrels per day this year and 1.2 million barrels per day next year.
Global Economic Growth Forecast Unchanged, Japan's Growth Downgraded
The report maintains the forecast for global economic growth at 2.8% for 2024, unchanged from last month.
Among major economies, the United States, Eurozone, China, and India are expected to experience relatively steady growth, while the economic growth forecast for Japan has been downgraded.
OPEC anticipates that in the second half of 2024, major central banks, particularly those in the United States, Eurozone, and the United Kingdom, will shift towards more accommodative monetary policies.
