IEA sees oil demand headwinds, but raises 2024 growth
The IEA has revised up its oil demand growth forecast for 2024 but said a near-term global economy slowdown is weighing on consumption. It sees supply exceeding demand next year.
In its monthly Oil Market Report (OMR) released today, the IEA said a deterioration in the macroeconomic outlook led it to a 390,000 b/d downward revision to its oil demand growth forecast for the final quarter of 2023. This was the driving force behind a 90,000 b/d downgrade to its 2023 demand growth estimate, which is now 2.27mn b/d.
"The impact of higher interest rates is feeding through to the real economy while petrochemical activity shifts increasingly to China, undermining growth elsewhere," the IEA said.
But the Paris-based organisation increased its oil demand growth projection for 2024, by 130,000 b/d to 1.06mn b/d, "on account of a somewhat improved GDP outlook compared with last month's report." This would bring oil demand to a record 102.78mn b/d next year, compared with 101.73mn b/d in 2023. Still, its growth forecast for next year is less than half that of Opec, which this week kept its projection unchanged at 2.25mn b/d.
The IEA revised up its global oil supply growth estimate for this year to 1.8mn b/d from 1.7mn b/d in last month's OMR, with the US, Brazil and Guyana leading the way. It said US supply growth "continued to defy expectations" with output "shattering" the 20mn b/d mark in September. The IEA has upgraded US supply by close to 700,000 b/d since its June report, mostly because of better-than-expected operating efficiencies and well productivity.
It expects the US to continue leading supply growth in 2024, although this will slow to 600,000 b/d from 1.4mn b/d this year. Global oil supply growth is seen easing to 1.3mn b/d in 2024, down by 300,000 b/d from last month's report.
Much of this is because of the recent Opec+ decision to extend and deepen its production cuts into the first quarter of next year. Although the group announced a headline supply cut totalling 2.2mn b/d, actual new production cuts equate to a reduction of just 500,000 b/d compared with current targets.
The cuts mean the market will be in a supply deficit in the first quarter, reversing a previously projected inventory build, according to the IEA. But as things stand, there will be a surplus of 420,000 b/d for the year according to the IEA, and its latest estimates show the market in a surplus for 2022, 2023 and 2024.
It said oil market sentiment turned "turned decidedly bearish in November and early December" as "non-Opec supply strength coincided with slowing global oil demand growth."
Front-month Ice Brent crude futures had dropped from a 2023 high of almost $97/bl in late September to around $75/bl in early morning trading today. The IEA put the call on Opec crude at 28.4mn b/d in 2023, down from 28.7mn b/d last month. It estimates the call next year at 28.2mn b/d.
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Reformist Pezeshkian to be Iran’s next president
Reformist Pezeshkian to be Iran’s next president
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Beryl enters GOM, heading towards Texas: Update
Beryl enters GOM, heading towards Texas: Update
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Hurricane Beryl threat to US offshore oil lower
Hurricane Beryl threat to US offshore oil lower
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