OPEC sees strengthening world oil demand in H2 2024 amid production increase
(Bloomberg) – OPEC maintained forecasts for strengthening oil demand in the second half of the year, as the group and its allies prepare to revive some halted supplies.
World oil consumption will see a year-on-year increase of 2.3 MMbpd in the second half, about 150,000 bpd more than during the first, amid continued economic growth in China and other emerging economies, OPEC said in a monthly report. The estimates are considerably more bullish than others in the industry.
Led by Saudi Arabia, OPEC and its partners unveiled a plan earlier this month to start gradually restoring roughly 2 MMbpd of shuttered production from October. Prices initially slumped on the decision, but recouped losses as the coalition stressed that the hike could be postponed or called off.
Crude prices are trading near $81 a bbl in London, down about 12% from a peak reached in April, as OPEC’s supply restraints struggle to counter a flood of new oil from the Americas. China’s fragile economy and uncertainty over U.S. monetary policy have also caused concerns about the strength of demand.
OPEC’s data indicate that the group and its allies should easily be able to manage the supply restart without destabilizing global markets or causing inventories to pile up. It projects that the full 22-nation OPEC+ alliance will need to provide 43.6 MMbpd in the third quarter, or about 2.7 MMbpd more than it pumped last month.
But estimates from the organization’s Vienna-based secretariat are based on an assessment of demand that’s far stronger than most other forecasters.
OPEC forecasts that world consumption will swell by 2.2 MMbpd this year — almost 50% higher than the rate anticipated a few months ago by Saudi Arabia’s state-run oil company. The organization expects demand will average 104.5 MMbpd in 2024.
For the first quarter, OPEC estimates that global oil consumption soared by 2.3 MMbpd, more than double the increase observed by the International Energy Agency, an adviser to major economies in Paris.
OPEC’s forecasts have proved excessively bullish in the past. Last year, the group’s data pointed to a record inventory crunch of more than 3 MMbpd in the fourth quarter. Instead, crude prices slumped 19% and the alliance was compelled to announce deeper production cutbacks to shore up the market.
