Energies Agencies Differ on Oil Supply, Demand Forecasts –Note
Energy agencies differ greatly in oil supply and demand forecasts amidst uncertainties in the global economy. The major energy agencies released their monthly forecasts last week that continue to vary widely, Commerzbank said in a note.
The International Energy Agency revised downward its demand forecast for 2024 and 2025 but still expects global oil demand to increase by around 1 million barrels per day (b/d) compared to the previous year, the bank noted.
Oil demand in China in the second quarter is expected to have been slightly below the previous year’s level, according to the IEA.
Meanwhile the oil market is expected to remain undersupplied in the current quarter due to the Organization of the Petroleum Exporting Countries (OPEC) and allied producers’ (OPEC+) voluntary output cuts, leading to lower inventories.
In contrast, OPEC maintained its significantly more optimistic forecasts for oil demand, according to Commerzbank note.
The increase is expected to be more than twice as strong this year as the IEA’s forecast. Therefore, OPEC expects the oil market to be undersupplied this quarter and the next few quarters.
The IEA’s forecast implied a balanced market in the fourth quarter and considerable supply surpluses next year, which means OPEC+ would have no scope to increase production next year.
The U.S. Energy Information Administration (EIA) expects the oil market to be undersupplied next year, even though oil demand is only expected to marginally exceed supply, the bank said.
Previously, the EIA assumed a slightly oversupplied market for 2025. However, the EIA expects a lower supply deficit this year because global oil supply is seen to increase more strongly than global demand in 2025, partly due to the gradual withdrawal of voluntary output cuts by some OPEC+ countries. Supply increases outside OPEC+ are also expected to continue, according to Commerzbank. JEDC Loses N1.6bn Revenue to Energy Theft
