Energy
Thursday, December 14th, 2023 3:05 pm EDT
Key Points
- IEA’s Warning on Softening Global Oil Demand: The International Energy Agency (IEA) has highlighted growing evidence of a softening trend in global oil demand, predicting a continued slowdown into 2024. The agency expressed a “decidedly bearish” sentiment in recent weeks, even after OPEC and non-OPEC allies (OPEC+) announced voluntary production cuts for the first quarter of the next year. The IEA’s monthly oil market report emphasized concerns about weakening macroeconomic conditions impacting oil demand.
- IEA’s Projections and Downward Revision: According to the IEA’s latest report, global oil demand is expected to rise by 2.3 million barrels per day to reach 101.7 million barrels per day in 2023. However, the agency cautioned that this forecast may not fully capture the impact of a further weakening macroeconomic climate. The evidence of a slowdown in oil demand prompted the IEA to anticipate a significant reduction in the pace of expansion, slowing drastically from 2.8 million barrels per day year-on-year in the third quarter to 1.9 million barrels per day in the final three months of 2023. The IEA revised its global consumption growth forecast downward by nearly 400,000 barrels per day in the fourth quarter, attributing the adjustment to weaker-than-anticipated demand in Europe, Russia, and the Middle East.
- Contrasting Views: IEA vs. OPEC: The IEA’s outlook contrasts sharply with OPEC’s stance as outlined in its latest monthly report. OPEC, which has historically clashed with the IEA on issues such as peak oil demand and investment in new supplies, maintained a “cautiously optimistic” perspective on market dynamics in 2024. OPEC attributed the recent crude price downturn to “exaggerated concerns” about oil demand growth. The oil-producing group reaffirmed its outlook for world oil demand growth in 2023 at 2.46 million barrels per day, aligning closely with the IEA’s forecast. However, for the next year, OPEC projected world oil demand at 2.25 million barrels per day, a significantly higher estimate compared to the IEA’s more conservative prediction of 1.1 million barrels per day for the same period. This divergence underscores the differing assessments between the IEA and OPEC regarding the trajectory of global oil demand.
The International Energy Agency (IEA) has provided a cautionary outlook on global oil demand, indicating evidence of a softening trend expected to persist into 2024. In contrast to the perspective of the Organization of the Petroleum Exporting Countries (OPEC), the IEA emphasized a notably bearish sentiment in recent weeks, even following OPEC+’s announcement of voluntary production cuts for the first quarter of the upcoming year.
Despite oil prices rebounding on the day, the IEA’s latest monthly oil market report outlined concerns about weakening global oil demand. The agency projected a rise in global demand by 2.3 million barrels per day to reach 101.7 million barrels per day in 2023. However, the IEA warned that this forecast may mask the impact of a further deterioration in the macroeconomic climate.
Highlighting the mounting evidence of a slowdown in oil demand, the IEA suggested a substantial reduction in the pace of expansion. The rate, which stood at 2.8 million barrels per day year-on-year in the third quarter, is anticipated to slow drastically to 1.9 million barrels per day in the final three months of 2023. This prompted a downward revision of the IEA’s global consumption growth forecast by nearly 400,000 in the fourth quarter.
The IEA attributed the adjustment to weaker-than-anticipated demand in key regions such as Europe, Russia, and the Middle East. Looking ahead, the agency projected a significant contraction in oil consumption growth for the next year, estimating a decline to 1.1 million barrels per day. This decrease is attributed to ongoing global economic challenges and the anticipated fading of Covid-19-related distortions.
In contrast, OPEC presented a markedly different perspective in its recent monthly report. The oil-producing group, known for diverging views with the IEA on various aspects of the oil market, expressed cautious optimism about market dynamics in 2024. OPEC attributed the recent downturn in crude prices to “exaggerated concerns” about oil demand growth and maintained a relatively optimistic outlook for next year.
OPEC’s projections for world oil demand growth in 2023 align closely with the IEA’s forecast, standing at 2.46 million barrels per day. However, for the following year, OPEC’s estimate of 2.25 million barrels per day sharply contrasts with the IEA’s more conservative prediction of 1.1 million barrels per day. This disparity underscores the differing views between the two influential entities regarding the trajectory of global oil demand in the coming years.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/12/14/iea-says-oil-demand-slowdown-to-persist-in-2024-amid-oversupply-fears.html
