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Informist, Thursday, Nov. 14, 2024

 

MUMBAI – The International Energy Agency expects global crude oil demand to grow by 920,000 barrels per day to 102.8 million barrels per day in 2024, and by lower than 1 million barrels per day to 103.8 million barrels per day in 2025. The slowdown in demand growth from recent years reflects the end of the post-pandemic release of pent-up demand and below-par underlying global economic conditions, as well as clean energy technology deployment, the agency said in its oil outlook report released Thursday.

 

Demand from China contracted for the sixth straight month in September, taking the average demand in the world's top crude oil importer in the third quarter of 2024 (Jul-Sept) to 270,000 barrels per day below the average for the same period last year, as per the report. In a sharp contrast, oil demand growth in advanced economies reversed course, expanding by 230,000 barrels per day during this period, it said.

 

The energy watchdog kept its global oil consumption growth estimates for 2025 unchanged at 990,000 barrels per day. Moreover, rapid deployment of clean energy technologies is also increasingly displacing oil in transport and power generation, adding downward pressure to otherwise weak demand drivers, it said.

 

Meanwhile, global oil supply rose by 290,000 barrels per day in October to 102.9 million barrels per day, as the return of Libyan barrels to the market more than offset lower Kazakh and Iranian supplies, the agency said. The Organisation of Petroleum Exporting Countries and allies delayed the unwinding of additional voluntary production cuts to January, at the earliest. Non-OPEC+ producers will boost supply by roughly 1.5 million barrels per day in both 2024 and 2025, according to the agency.

 

Global oil inventories plunged by 47.5 million barrels in September, their lowest level since January, due to a sharp draw in Organization for Economic Cooperation and Development oil products and non-OECD crude oil stocks. OECD industry stocks fell by 36.4 million barrels, 95.3 million barrels below the five-year average. Provisional data suggest total global stocks decreased for a fifth consecutive month in October, the energy watchdog said.

 

"Refinery margins improved in October as seasonal maintenance and economic run cuts supported product cracks," it said. Global refinery runs hit a seasonal low in October before starting to recover in November and will average at 82.8 million barrels per day this year and 83.4 million barrels per day in 2025. Annual growth of roughly 600,000 barrels per day is driven largely by OECD Americas in 2024 and by non-OECD regions in 2025, the energy agency said.

 

Following the US elections, the agency expects the US to lead non-OPEC+ supply growth of 1.5 million barrels per day in both 2024 and 2025, along with higher output from Canada, Guyana and Argentina. Plagued by a number of unscheduled outages and operational underperformance this year, Brazil is expected to be a major source of growth next year, according to the IEA.

 

"Latin America's largest producer is forecast to boost supply by 210 kb/d (thousand barrels per day) to 3.7 mb/d (million barrels per day) in 2025, as more than 800 kb/d of new capacity starts up. Total growth from the five American producers will more than cover expected demand growth in 2024 and 2025," the agency said.

 

On the other hand, OPEC and its allies postponed a scheduled production increase at its meeting earlier this month. The alliance will hold its full bi-annual ministerial meeting on Dec. 1 to review the market outlook and production policies for 2025, it said. The agency said that even if the production cuts by OPEC and its allies remain in place, global supply will exceed demand by more than 1 million barrels per day next year. 

 

In terms of prices, Brent futures rose $2.50 per barrel on month to $75.38 per barrel in October, but traded in a wide $10 per barrel range. Prices peaked at $80.90 per barrel early in the month on escalating tensions in West Asia but subsequently eased to close the month at around $73 per barrel. 

 

At 2119 IST, the price of West Texas Intermediate crude oil on the New York Mercantile Exchange was $68.93 per barrel, while that of Brent crude on the Intercontinental Exchange was $72.76 per barrel.  End

 

US$1 = INR 84.39

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Taniva Singha Roy

Edited by Tanima Banerjee

 

 

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