Global Oil Market Projections for 2024 and Beyond

Global oil demand will increase by 1.1 million barrels per day (mb/d) in 2024, according to the International Energy Agency (IEA).

This projection is 140,000 barrels per day (kb/d) lower than last month’s estimate. Weaker deliveries, especially in Europe, caused OECD demand to contract in the first quarter.

However, the outlook for 2025 remains stable. Demand growth will slightly surpass 2024, rising by 1.2 mb/d.

World oil supply will grow by 580 kb/d this year, reaching a record 102.7 mb/d. A rise of 1.4 mb/d in non-OPEC+ production drives this increase.

Meanwhile, OPEC+ output will decline by 840 kb/d, assuming voluntary cuts continue. By 2025, global supply could rise by 1.8 mb/d as non-OPEC+ adds another 1.4 mb/d.

In April, global oil supply fell by 200 kb/d to 102 mb/d. Refinery margins eased across all regions due to weaker-than-expected demand growth.

Lower throughput levels and a collapse in middle distillate cracks led to this decline.

Refinery activity will grow from just above zero in the first quarter of 2024 to 500 kb/d in the second quarter. It will then rise to 1.8 mb/d in the second half of the year.

Global oil inventories surged by 34.6 million barrels (mb) in March, with oil on water reaching a post-pandemic high.

Onshore stocks fell by 5.1 mb to their lowest level since at least 2016.

Total OECD stocks declined by 8.8 mb to a 20-year low. Preliminary data suggests global oil stocks rose further in April.

Brent Futures Peaked

Brent futures, which peaked above $91 per barrel (bbl) in early April, dropped to around $83/bbl.

Concerns about a broader Middle East conflict and softer macroeconomic sentiment weighed on prices.

The middle distillates market led this decline. The diesel forward curve slipped into contango after years of backwardation, and cracks fell to one-year lows.

Benchmark oil prices corrected sharply in April and early May. Concerns over the global economy and oil demand fueled this correction.

Reports of progress towards a truce in Gaza also pressured oil prices, despite ongoing geopolitical tensions.

By early May, Brent crude futures traded at around $83/bbl, down nearly $8/bbl from a month earlier.

The sell-off was most pronounced in middle distillate markets. Diesel and jet fuel cracks collapsed.

The NYMEX ULSD front-month contract flipped into contango, causing global refinery margins to fall to near two-year lows.

This decline spurred talks of run cuts that could undermine the seasonal rebound in throughput rates.

European refinery margins slumped more than those in the US Gulf Coast and Singapore due to weak regional demand.

Global Oil Market Projections for 2024 and Beyond

Poor industrial activity and another mild winter have reduced gasoil consumption, especially in Europe. The declining share of diesel cars has further undercut consumption.

European gasoil demand dropped by 210 kb/d in 2023 and by another 140 kb/d year-on-year in the first quarter of 2024.

Weak diesel deliveries in the US also contributed to the first-quarter contraction in OECD oil demand.

OPEC+ ministers are set to meet in Vienna on June 1 to discuss production policy.

Despite recent weaknesses, current balances indicate a need for OPEC+ crude oil at around 42 mb/d in the second half of the year, roughly 700 kb/d above April’s output.

Next year, the market looks more balanced. If OPEC+ voluntary cuts remain, global oil supply could rise by 1.8 mb/d, compared with this year’s 580 kb/d increase.

Non-OPEC+ output will grow by 1.4 mb/d in both years. OPEC+ output will shift from an 840 kb/d decline this year to a 330 kb/d increase in 2025.

The United States, Guyana, Canada, and Brazil will lead these gains. The June meeting will also likely examine global oil inventories.

Preliminary data indicates further stock builds in April as onshore inventories surged.

Achieving historical average stock levels will be crucial to avoid renewed market volatility.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error

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