Opec sticks with robust 2024 demand growth forecast

Market: Crude oil
13/12/23

Opec has kept its oil demand growth forecast for 2024 unchanged.

In its final Monthly Oil Market Report (MOMR) of the year, Opec has stuck with a robust oil demand growth projection of 2.25mn b/d for next year, following on from a 2.46mn b/d increase this year. Notably, there is zero change to its first-quarter estimate when some members of the wider Opec+ group are due to implement additional "voluntary" output cuts.

Opec said its forecast — which brings total oil demand to a record 104.36mn b/d next year — is underpinned by "sustained economic and petrochemical activity across major consumer nations, which fosters demand for transportation fuels and distillates in 2024."

Six Opec+ members on 30 November announced additional output cuts worth 700,000 b/d to be implemented in the first quarter of next year. This brings the total amount of cuts pledged by the alliance since October 2022 to 5.4mn b/d. Saudi Arabia's energy minister Prince Abdulaziz bin Salman has said the latest cuts — which may be extended — should help erase a projected market surplus in the first quarter.

Opec's latest report said the cuts were in "response to the broad spectrum of uncertainties that continues to surround the global oil market."

The latest cuts pledge has failed to halt a recent slide in oil prices. Front-month Ice Brent crude futures had dropped from a 2023 high of almost $97/bl in late September to around $73/bl as of midday London time today. Opec's previous MOMR said "exaggerated negative sentiments" and "financial market speculators" were behind the weakening in oil prices as oil market fundamentals are "healthy".

The group has kept its forecast for non-Opec liquids supply growth for this year unchanged at 1.78mn b/d, with the US and Brazil accounting for the bulk of the increase. For next year, it sees non-Opec supply growth of 1.37mn b/d, led by the US, Canada and Guyana, compared with 1.38mn b/d in last month's MOMR.

Opec's forecast call on its own members' crude also remains unchanged at 29.08mn b/d for 2023, but was nudged up by 10,000 b/d to 29.89mn b/d for 2024. The group produced 27.84mn b/d in November, down by around 60,000 b/d compared to October, according to an average of secondary sources that includes Argus.

By Aydin Calik

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