The International Energy Agency has updated its global oil demand outlook for 2024, highlighting a significant rebound in consumption across advanced economies during the third quarter. Current forecasts now indicate that world oil demand is anticipated to increase by 920,000 barrels per day in 2023, a notable revision from the previous estimate which hovered just below 900,000 barrels.
In contrast, last year's demand growth was nearly 2 million barrels per day, according to the agency's comprehensive monthly review. China's oil demand has faced continuous contraction, experiencing its sixth straight month of decline in September. Meanwhile, advanced economies have shown resilience, reporting a recovery in consumption compared to the same period last year.
The slowdown in China stands out as a significant drag on overall demand, leading to growth expectations for the country of only a tenth of the projected 1.4 million barrels per day increase for 2023. Looking ahead, the agency forecasts global oil consumption growth for 2024 to remain at 990,000 barrels per day, marking a figure that is essentially unchanged from previous estimates.
The agency has underscored that the sub-1 million barrels per day growth for both years reflects ongoing challenges in the global economic landscape. The surge in demand that followed the pandemic appears to have reached its conclusion, while the rapid deployment of clean energy technologies continues to replace oil in both transportation and power generation, further exerting downward pressure on demand.
In the commodities market, West Texas Intermediate crude oil was trading down 0.2% at $68.33 a barrel, while Brent crude saw a slight decline of 0.1% to $72.04. The Brent futures have decreased from their peak of over $80 a barrel at the start of October, largely attributed to alleviated fears regarding potential Israeli military actions impacting Iran's energy sector. In a concurrent report, the Organization of the Petroleum Exporting Countries (OPEC) announced a reduction in its global oil demand projections for 2024 and 2025, marking the fourth consecutive month of downward adjustments.
In terms of oil supply, the IEA reported that global supply is on the rise, growing at a robust pace. They project an increase of approximately 1.5 million barrels per day in both 2024 and 2025, predominantly from non-OPEC and OPEC+ countries. The United States is expected to spearhead the growth in non-OPEC+ supplies, alongside anticipated production increases from Canada, Guyana, and Argentina.
OPEC+ has opted to postpone the unwinding of additional voluntary production cuts until at least January of next year. The IEA emphasized that despite OPEC+ maintaining its production cuts, the expected global supply would still surpass demand by over 1 million barrels per day next year. The persistent supply risks—exacerbated by factors including the COVID pandemic, geopolitical tensions from Russia's invasion of Ukraine, and escalating unrest in the Middle East—underscore the need for a more balanced oil market..