Slowing global oil demand meets modest supply gains: IEA’s July 2024 Market Outlook
Global oil demand is slowing down, with a year-on-year growth of only 710 kb/d in 2Q24, the lowest since 4Q22, reports a Kazinform News Agency correspondent, citing the IEA Oil Market Report (OMR) for July 2024.
Demand in China is declining, while global demand is projected to grow by around 1 mb/d in 2024 and 2025, hindered by economic slowdowns, efficiency improvements, and vehicle electrification.
Oil supply increased by 150 kb/d to 102.9 mb/d in June, mainly due to reduced field maintenance and a rise in biofuels, although Saudi production fell significantly. Output in 2Q24 grew by 910 kb/d from the previous quarter, and a further increase of 770 kb/d is expected in 3Q24, mostly from non-OPEC+ countries. Global oil supply is forecast to rise by 770 kb/d in 2024, reaching 103 mb/d, with non-OPEC+ contributing the majority of the growth.
Refinery throughput is expected to rise by 950 kb/d in 2024 to 83.4 mb/d and by 630 kb/d in 2025. Margins have dropped to multi-year lows due to weak demand and poor refining margins in China and Europe.
“Weak demand and poor margins pressured Chinese and European crude processing in May. Margins declined in June in the Atlantic Basin and are close to multi-year lows. In Asia, they rebounded modestly in June, as run cuts eased regional crude market tensions,” the report quotes.
Brent crude oil prices recovered in June, increasing by $5/bbl to $86/bbl, driven by lower crude stocks, short covering by investors, and ongoing geopolitical tensions in the Middle East.
Global oil inventories increased for the fourth consecutive month in May, with offshore inventories decreasing while onshore stocks reached a 30-month high. Preliminary data for June shows a decrease in global oil stocks by 18.1 mb, primarily in crude oil.
In early June, OPEC+ outlined plans to potentially reverse their voluntary supply cuts depending on market conditions, with a monitoring committee set to review these changes in August. The forecast for OPEC+ oil demand shows a need for increased production in the coming years, despite overall slowing demand growth.
“For next year, the call on OPEC+ crude tumbles to 41.1 mb/d as demand growth continues to slow and non-OPEC+ output continue to expand. After the hot summer, cooler trends are set to prevail,” the report concludes.
