OPEC trims demand growth forecasts again, remains comparatively bullish

OPEC trimmed its estimate for global oil demand growth in 2024 and 2025 for the fourth time in as many months, days after punting plans to start tapering 2.2 million b/d of voluntary cuts into January, although the bloc remains far more bullish than many other forecasters.

In its closely watched monthly oil market report, released Nov. 12, OPEC said it expected worldwide demand to grow by 1.82 million b/d in 2024 -- down 110,000 b/d month on month and 430,000 b/d since July's forecast -- to 104.03 million b/d.

Meanwhile in 2025, consumption will rise 1.54 million b/d, OPEC said, down from its forecast of 1.64 million b/d in October.

But while OPEC has trimmed its demand forecasts in recent months, it remains far more optimistic than its fellow forecasters, with the estimated "call" on OPEC+ crude -- the quantity the alliance must produce to balance the market -- well above current production.

Indeed, OPEC expects demand for OPEC+ crude to be 42.70 million b/d in 2024 (down 100,000 b/d from October's estimate) and 43 million b/d in 2025 (down 200,000 b/d), compared to group-wide production of just 40.338 million b/d in October -- up 210,000 b/d month on month -- according to secondary sources used to estimate crude output.

If that estimate is borne out, the alliance would be able to boost production by more than 2 million b/d to match supply with demand.

By contrast, the International Energy Agency, which represents wealthy oil consumers, sees the oil market as "adequately supplied" and expects demand growth of a mere 860,000 b/d in 2024. The IEA is set to release its own monthly report on Nov. 14.

Meanwhile, the US Energy Information Administration pegged 2024 demand growth at 1 million b/d in its October Short Term Energy Outlook and is due to issue its updated forecast on Nov. 13.

In its report, OPEC -- which does not see consumption peaking through 2050 -- said oil demand growth will be "bolstered by strong transportation fuel demand and ongoing healthy economic growth, particularly in a number of non-OECD countries," as well as "refinery capacity additions and petrochemical margins".

It also points to declining oil stocks as evidence of a robust crude market. According to the report, total OECD oil stocks in September were down by 3 million barrels month on month at 2.808 billion barrels, some 86.2 million barrels below the five-year average.

Stocks could be even lower, and the market tighter, if OPEC+ producers had not exceeded their production targets in 2024, according to sources within the alliance. Iraq, Kazakhstan and Russia have all submitted "compensation plans" to make up for excess volumes.

Price weakness

Despite its bullishness, weak prices continue to prove a major challenge for OPEC+, which on Nov. 3 opted to delay for the second time plans to gradually reintroduce 2.2 million b/d of voluntary cuts. Eight countries had planned to start the taper -- which would reduce the quantity of crude OPEC+ is withholding to 3.6 million b/d -- on Oct. 1, but should now do so on Jan. 1, subject to market conditions.

Platts, a unit of Commodity Insights, last assessed Dated Brent at $72.37/b on Nov. 11, down from $81.20/b in early October, with high output among non-OPEC+ producers in the Americas, sluggish demand from key importer China, tepid global growth, fears of a 2025 supply glut and non-compliance exerting downward pressure on the benchmark.

Meanwhile, signs of a ratcheting down of tensions between Iran and Israel appear to have cut down the so-called geopolitical risk premium, equivalent to a few dollars per barrel, analysts say.

OPEC+ delegates are due to convene in Vienna on Dec. 1 for a full ministerial meeting.