Oil Drops as OPEC, EIA Differ on Demand Outlook
Oil prices slip as the Organisation of Petroleum Exporting Countries (OPEC) and Energy Information Administration (EIA) differ on demand outlook.
Data from global commodity market revealed that Brent crude fell 0.2% to US$82.46 per barrel and West Texas Intermediate crude lost 0.2% to US$78.33.
Yesterday, market prices of oil edged higher despite a fair amount of bearish oil data. However, attention has returned back to oil fundamentals this morning with prices under renewed pressure.
OPEC maintained its 2024 demand forecast at 2.2-million barrels per day over 2023 levels in its June market report and its 1.2-million bpd forecast for production gains from non-OPEC countries.
The IEA’s monthly oil market report was also fairly bearish, with the agency revising down its demand growth forecasts further this month.
The IEA now expects global oil demand to grow by 960k b/d this year, down 100k b/d from their previous estimates, ING commodities strategists said in a Thursday note.
Analysts stated that concerns over weaker demand are not a surprise, given the weakness seen in refinery margins over much of the second quarter.
This revision lower in demand growth only sees the divergence between IEA and OPEC forecasts grow, with OPEC still holding onto the view that oil demand will grow by 2.25m b/d this year, ING said.
For 2025, the IEA expects oil demand to grow by 1m b/d. This modest demand growth coupled with strong supply growth means that OPEC+ could have to extend their additional voluntary cuts beyond the third quarter of this year rather than gradually unwinding them.
The IEA also published its Oil 2024 publication, in which it shares its view on the oil market through to 2030. Its latest long-term estimates suggest that global oil demand will only grow by 3.2m b/d between 2023 and 2030, and will level off at the end of this decade.
This plateauing in demand will coincide with a rise in global production capacity. The IEA estimates that global production capacity will grow by 6m b/d to 113.8m b/d by 2030, which would leave production capacity at more than 8m b/d above projected demand.
The US commercial crude oil inventories increased by 3.73m barrels over the last week. This large inventory build was due to stronger crude oil imports and weaker exports.
Imports jumped by 1.25m b/d week-on-week to 8.3m b/d, the largest weekly import volume since 2018, while crude exports fell 1.31m b/d week on week. Heads of State, Ministers Discuss Economic Prosperity
