Opec trims oil demand outlook again

Alamy via Reuters

• Forecast down to 2 million bpd
• 2025 prediction also revised
• Oil group optimistic over economy

Opec has reduced its oil demand forecast for 2024 for the second consecutive time, but it remains optimistic despite bearish markets.

The oil producers group said on Tuesday that it was revising down world oil demand by 80,000 barrels per day to about 2 million bpd “reflecting data received so far this year”.

It also trimmed the forecast for 2025 by 40,000 bpd to 1.7 million bpd.

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In August Opec reduced its bullish forecast for oil this year by 135,000 bpd to 2.1 million bpd.

The organisation slightly upped its forecast for world economic growth to 3 percent, but kept its prediction for 2025 unchanged at 2.9 percent.

Eight members of Opec+, including Saudi Arabia, the UAE and Russia, agreed last Thursday to delay unwinding their voluntary output cuts until December 1. The block, made up of the Organisation of the Petroleum Exporting Countries and allies led by Russia, is holding back 5.86 million bpd. 

It was planning to gradually hike production by 180,000 bpd in October and by 540,000 by the end of the year. It would continue in this vein until it had completely unwound 2.2 million bpd of voluntary curbs over the next 12 months.

Opec's decision failed to increase oil prices however, as market sentiment remains on a downward trend.

Brent traded nearly 1 percent down at $71.21 at 16:43 GST on Tuesday, while WTI traded at $68.11.

• Opec+ delay to output rise fails to rejuvenate oil price
• Frank Kane: October presents Opec+ with a quandary
• Opec cuts forecast for oil demand growth

Crude prices have lost 22 percent in one year, wiping gains from the last 12 months over uncertainties about China’s slowing oil demand, expectations of the US Federal Reserve decision on interest rates, and the US presidential elections.

“Looking ahead, China’s economic growth is expected to remain well supported,” Opec said in its monthly report. 

In 2024 it projects Chinese oil demand to grow to an average of 17 million bpd. 

“However, headwinds in the real estate sector and the increasing penetration of LNG trucks and electric vehicles are likely to weigh on diesel and gasoline demand going forward,” it said.

Opec’s outlooks vastly differ from other, much more pessimistic forecasts about the future of oil demand.

The International Energy Agency expects it to rise by only 1 million bpd this year and to level off near 106 million bpd towards 2030.