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OPEC sticks to 2024 oil demand view, sees strong travel season

Published 10/07/2024, 11:19 pm
Updated 11/07/2024, 12:24 am
© Reuters. File photo: A person puts gas in a vehicle at a gas station in Manhattan, New York City, U.S., August 11, 2022. REUTERS/Andrew Kelly/File photo
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By Vladimir Soldatkin and Alex Lawler

MOSCOW/LONDON (Reuters) -OPEC stuck to its forecast for relatively strong growth in global oil demand in 2024 and next year, saying on Wednesday that resilient economic growth and air travel would support fuel use in the summer months.

The Organization of the Petroleum Exporting Countries, in a monthly report, said world oil demand would rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025. Both forecasts were unchanged from last month.

"Expected strong mobility and air travel in the Northern Hemisphere during the summer driving/holiday season is anticipated to bolster demand for transportation fuels and drive growth in the United States," OPEC said in the report.

Oil forecasters are split more widely than usual on the strength of oil demand growth for this year and the medium term, partly due to differences over the pace of the world's transition to cleaner fuels. Earlier on Wednesday, BP (LON:BP) said oil demand would peak next year.

OPEC+, which groups OPEC and allies such as Russia, has implemented a series of output cuts since late 2022 to support the market. The group agreed on June 2 to extend the latest cut of 2.2 million bpd until the end of September and gradually phase it out from October.

OPEC also raised its forecast for world economic growth this year to 2.9% from 2.8%, and said there was potential upside to that number, citing momentum outside developed countries in the Organization for Economic Cooperation and Development.

"Economic growth momentum in major economies remained resilient in the first half. This trend supports an overall positive growth trajectory in the near term," OPEC said.

Oil was steady after the OPEC report was released, with Brent crude trading below $85 a barrel.

OPEC's forecasts are at the high end of what the industry expects and while it has not forecast a timeline for when demand will peak, BP expects it to do so next year in both of the two main scenarios in its annual Energy Outlook, published on Wednesday.

The International Energy Agency, which represents industrialised countries, expects much lower 2024 demand growth than OPEC, of 960,000 bpd, and is scheduled to provide an update on its view on Thursday.

© Reuters. File photo: A person puts gas in a vehicle at a gas station in Manhattan, New York City, U.S., August 11, 2022. REUTERS/Andrew Kelly/File photo

OPEC's report points to an oil supply deficit in coming months and in 2025 - a larger deficit than the shortfall predicted on Tuesday by U.S. government forecaster the Energy Information Administration.

The OPEC report also projects demand for OPEC+ crude, or crude from OPEC plus the allied countries working with it, at 43.6 million bpd in the third quarter, much more than the group is currently pumping, according to the report.

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