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OPEC again lowers 2024, 2025 global oil demand growth view

Crude Oil Price Movements

In August, the OPEC Reference Basket (ORB) value fell by $6.02, or 7.1%, m-o-m, to average $78.41/b. The ICE Brent front-month contract dropped by $5.00, or 6.0%, m-o-m, to stand at $78.88/b. The NYMEX WTI front-month contract dropped by $5.05, or 6.3%, to average $75.43/b. The DME Oman front-month contract dropped by $5.83, or 7.0%, to settle at $77.54/b. The front-month ICE Brent/NYMEX WTI spread widened by 5¢, m-o-m, to stand at $3.45/b. The forward curves of oil futures prices flattened slightly, but all major crude benchmarks remained in backwardation. Money managers closed long positions and raised short positions, particularly in the ICE Brent market.

World Economy

The world economic growth forecast in 2024 is revised up slightly to 3%, while the forecast for 2025 remains at 2.9%, unchanged from last month’s assessment. The US economic growth forecasts for 2024 and 2025 remain at 2.4% and 1.9%, respectively. Japan’s economic growth forecasts for 2024 and 2025 remain at 0.2% and 0.9%, respectively. For the Eurozone, the economic growth forecast for 2024 is revised up slightly to 0.8%, while the 2025 forecast remains at 1.2%. China’s economic growth forecasts remain at 4.9% for 2024 and 4.6% for 2025. India’s economic growth forecast for 2024 is revised up to 6.8% due to robust growth in 1H24,
while the 2025 forecast remains at 6.3%. The economic growth forecast for Brazil is revised up to 2.2% for 2024 and remains at 1.9% for 2025. Russia’s economic growth forecast is revised up slightly to 3.2% in 2024 and remains at 1.5% in 2025.

World Oil Demand

The world oil demand growth forecast for 2024 is revised down slightly to about 2.0 mb/d, which is still well above the historical average of 1.4 mb/d seen prior to the COVID-19 pandemic. This minor adjustment of 80 tb/d reflects mainly actual data received year-to-date. OECD oil demand is expected to grow by around 0.1 mb/d in 2024, with OECD Americas accounting for the entire growth. Non-OECD oil demand is expected to grow by around 1.9 mb/d. The forecast for world oil demand growth in 2025 is also slightly revised down by a mere 40 tb/d to stand at 1.7 mb/d. Non-OECD demand is set to drive next year’s growth, increasing by about 1.6 mb/d, led by contributions from China, the Middle East, Other Asia, and India. OECD demand is forecast to expand by about 0.1 mb/d, with OECD Americas contributing the most.

World Oil Supply

Non-DoC liquids supply (i.e. liquids supply from countries not participating in the Declaration of Cooperation) is expected to grow by 1.2 mb/d in 2024, unchanged from last month’s assessment. The main growth drivers are expected to be the US, Canada, and Brazil. The non-DoC liquids supply growth forecast for 2025 is also unchanged at 1.1 mb/d. The growth is anticipated to be mainly driven by the US, Brazil, Canada, and Norway. Natural gas liquids (NGLs) and non-conventional liquids from countries participating in the DoC is forecast to grow by about 0.1 mb/d to average 8.3 mb/d in 2024, followed by an increase of about 60 tb/d to reach 8.4 mb/d in 2025. Crude oil production by the countries participating in the DoC decreased by 304 tb/d in August compared with the previous month, averaging about 40.66 mb/d, as reported by available secondary sources.

Product Markets and Refining Operations

Refinery margins in August declined across all regions. In the USGC, gasoline inventories fell to a ten-month low, but jet/kerosene stocks continued to build despite reaching multi-year record highs at the end of July. In Northwest Europe, low gasoline exports and a poor crack spread for high sulphur fuel oil (HSFO) further weighed on product markets. In Singapore, all products except for naphtha experienced a m-o-m decline in crack spreads. In Asia, product oversupply and challenging inter-regional export opportunities, particularly for gasoil, weighed on refining economics. The robust naphtha performance, following the end of cracker maintenance in the region, likely prevented steeper losses in the Southeast Asian refining margins. Global refinery intake continued its upward trajectory in August, increasing by 724 tb/d, m-o-m, to average of 83.1 mb/d. Going forward, run rates are expected to start to subside, particularly in the Atlantic Basin, as refiners enter the refinery maintenance season, which should support refining margins.

Tanker Market

Dirty spot freight rates for VLCCs showed mixed movements in August, while rates for Suezmax and Aframax experienced declines on all monitored routes. Seasonally softer demand resulted in a general downward drift in rates. The VLCC spot freight rates enjoyed some strength early in the month before moving lower by the end of August, although movements varied according to the region. On the Middle East-to-East route, spot freight rates were unchanged, m-o-m, while rates on the Middle East-to-West route fell by 3% and spot rates on the West Africa-to-Europe route rose by 2%, m-o-m. In the Suezmax market, spot rates experienced a m-o-m decline on all monitored routes, despite a pickup in rates toward the end of the month, as market fundamentals improved. The US Gulf Coast-to-Europe route led declines, falling by 23%, m-o-m. Aframax rates on the Indonesia-to-East route declined by 10%, m-o-m, while the rates on the cross-Med route declined by 11%, impacted at the end of the month by reduced tanker demand from North Africa. The clean market was weighed down by softer seasonal activity. Clean spot freight rates showed further m-o-m declines, falling by 33% East of Suez and by 24% West of Suez.

Crude and Refined Product Trade

Preliminary estimates for August based on weekly data show US crude exports falling below 4 mb/d, averaging 3.8 mb/d. US product exports, however, stood at an eight-month high of 6.9 mb/d, amid a recovery of exports to Asia and continued healthy flows to Europe. Preliminary estimates showed OECD Europe crude imports declining in August, amid lower flows from Central Asia, while product imports picked up, amid increased flows from the US. Japan’s crude imports fell further in July, averaging 2.0 mb/d. Japan’s product imports edged up 4% m-o-m, driven by higher inflows of gasoline. China’s crude imports in July averaged just under 10 mb/d, partly reflecting seasonal trends. Product imports into China edged up by 2%, supported by higher inflows of naphtha. China’s product outflows fell by 9% m-o-m, weighed down by declines in diesel, gasoline, and fuel oil, although jet fuel exports were higher. India’s crude imports were broadly unchanged in July, averaging 4.6 mb/d, in line with seasonal trends. India’s product imports jumped by 19% m-o-m, with gains across all main products, led by higher inflows of LPG.

Commercial Stock Movements

Preliminary July 2024 data for total OECD commercial oil stocks shows a draw of 11.7 mb, m-o-m, to stand at 2,815 mb. This is about 154 mb below the 2015–2019 average. Within components, crude and product stocks fell by 5.1 mb and 6.6 mb, respectively. OECD commercial crude stocks stood at 1,350 mb in July. This is 112 mb less than the 2015–2019 average. OECD total product stocks stood at 1,466 mb in July. This is 42 mb below the 2015–2019 average. In terms of days of forward cover, OECD commercial oil stocks fell by 0.1 days, m-o-m, to stand at 61.1 days in July. This is 1.4 days lower than the 2015–2019 average.

Balance of Supply and Demand

Demand for DoC crude (i.e. crude from countries participating in the Declaration of Cooperation) is revised down by 0.1 mb/d from the previous month’s assessment to stand at 42.8 mb/d in 2024, which is around 0.7 mb/d higher than the estimate for 2023. Demand for DoC crude in 2025 is revised down by 0.2 mb/d from the previous month’s assessment to stand at 43.4 mb/d, around 0.6 mb/d higher than the estimate for 2024.
Source: OPEC

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