OPEC maintains bullish oil demand forecast for 2024

The Organization of the Petroleum Exporting Countries (OPEC) has maintained a cautiously optimistic note for oil demand growth forecast for 2024 in its latest Oil Market Report, highlighting that a resilient global GDP growth will support crude demand next year.

The group said in it’s the report that global oil demand growth forecast for 2024 will remain unchanged from last month’s estimate at 2.2 million barrels per day, following a demand growth of 2.46 million bpd this year – also supported by improving economic activity in China.

“As 2023 draws to an end, the OPEC Secretariat remains cautiously optimistic about the fundamental factors affecting oil market dynamics in 2024. In response to the broad spectrum of uncertainties that continues to surround the global oil market, many countries participating in DoC announced in November 2023 additional voluntary adjustments in 1Q24 to help maintain stability and balance in global oil markets. Indeed, countries participating in DoC will continue on these commitments to achieve and sustain a stable oil market and provide long-term guidance for the market,” OPEC said in the report.

Price drop due to ‘exaggerated concerns’

On the recent price volatility, the group said that the market dynamic “was fueled by exaggerated concerns about oil demand growth, which negatively impacted market sentiment”. OPEC’s crude production in November dropped by 57,000 bpd, compared with the previous month, to 27.84 million bpd.

OPEC emphasised that the forecast centres on sustained economic and petrochemical activity across major consumer nations, which would form the core foundation of the demand for transportation fuels and distillates in 2024.

In response to falling crude prices, the OPEC+ alliance on November 30 announced voluntary production cuts of 2.2 million bpd for the first quarter of 2024. OPEC member Saudi Arabia said it will keep its voluntary output cut of one million bpd until the end of March, while

Russia is expected to deepen its voluntary oil production cut to 500,000 bpd and extend it until the end of the first quarter of 2024.

S&P Global forecast for 2024

According to S&P Global, Asia is expected to account for the bulk of global oil demand growth in 2024, with strong economic growth helping South Asian demand edge past China.

“Asia will continue to dominate global oil demand growth in 2024. South Asian demand will likely increase by 3.2% in 2024, exceeding mainland China’s 2.9%,” said Zhuwei Wang, Asian oil analytics manager at S&P Global.

The agency also pointed to jet fuel providing ample growth opportunities in 2024. On an annual basis, global kerosene and jet demand is expected to grow 1.02 million b/d in 2023 to 7.13 million b/d, driven by China’s reopening after the pandemic – although global demand growth would slow to 420,000 b/d in 2024, S&P Global said.

Asia set for record refinery runs

The region could witness its refinery runs in first-quarter 2024 rise to a level not seen before, it said.

On the global oil market supply, the OPEC report forecast non-OPEC supply growth at 1.8 mb/d in 2023, with the US expected to account for 70% of the expansion. Other key contributors to this growth include Brazil, Kazakhstan, Norway, Guyana, Mexico and China, OPEC said.

The non-OPEC supply is forecast to expand by 1.4 mb/d on an annualised basis next year. Growth drivers include US tight oil output, offshore start-ups in Latin America and the North Sea, and the expansion of oil sands projects in Canada, it said.