OPEC has revised down its forecast for oil demand growth as oil prices continue to slump, erasing all gains made earlier this year. In its latest report, the cartel projected global oil demand to grow by 2.03 million barrels per day in 2024, down from its previous estimate of 2.11 million barrels. OPEC’s decision to delay planned output hikes has not been enough to stabilize prices, which are currently hovering around $71 per barrel for Brent crude and $68 for West Texas Intermediate (WTI). Weak economic data from China, along with the prospect of restored Libyan production, has intensified fears of a supply surplus.
While oil demand remains above pre-pandemic levels, driven by strong air travel, road mobility, and industrial activity in non-OECD countries, OPEC is facing growing pressure to address concerns about oversupply. Major financial institutions, including Goldman Sachs and Morgan Stanley, have downgraded their oil price forecasts amid concerns over slowing demand growth, particularly in China. Despite the gloomy outlook, OPEC raised its global economic growth estimates for this year to 3%, up from 2.9%.
Market Overview:- OPEC revised down its oil demand growth forecast for 2024 and 2025 due to falling prices and weak global demand.
- Brent crude is trading at $71 per barrel, and WTI at $68, as oil prices struggle to recover from last week’s drop.
- Wall Street banks, including Goldman Sachs (GS) and Morgan Stanley (MS), have lowered their oil price expectations.
- OPEC delayed planned output hikes by two months, but the move failed to reverse price declines.
- Weaker economic data from China and the potential return of Libyan oil production have contributed to fears of oversupply.
- OPEC maintained its supply growth estimates for 2024, with the U.S., Canada, and Brazil leading non-OPEC production.
- OPEC may face continued pressure to take further action to stabilize prices as the risk of a supply surplus looms.
- The International Energy Agency (IEA) will release its monthly report soon, with lower demand growth projections than OPEC’s.
- OPEC’s ability to manage its output curbs will be critical to balancing the global oil market in the coming year.
As OPEC grapples with the fallout from declining oil prices, its decision to delay output hikes has not been enough to shore up the market. Weak economic data from China, the world’s largest crude importer, has heightened concerns about global demand, while Libya’s potential return to full production threatens to exacerbate the supply glut. OPEC's latest report indicates that it remains cautiously optimistic about global economic growth, but questions persist over how long the group can maintain output curbs without losing market share.
The challenges facing OPEC underscore the fragility of the global oil market, as supply and demand imbalances continue to weigh on prices. The cartel’s efforts to stabilize the market will be closely monitored in the months ahead, particularly as it contends with external pressures from both within and outside the organization.
