Oil Prices Look for a Low After IEA Raises Demand Forecast

The IEA has forecast higher oil demand in 2024, leading to a jump in oil prices

USOIL – Daily Chart

USOIL – Daily Chart

USOIL trades at $71.63 and will look to move back to $75 initially. 

Global oil demand growth is slowing down this quarter compared to the third quarter, the International Energy Agency (IEA) said on Thursday. However, the group added that it will lift its 2024 demand growth projection by around 130,000 barrels per day (bpd) from last month. 

The IEA said it had lowered the Q4 consumption growth forecast by nearly 400,000 bpd, with Europe making up more than half of the revision. 

“Evidence of a slowdown in oil demand is mounting, with the pace of expansion set to ease from 2.8 mb/d y-o-y in 3Q23 to 1.9 mb/d in 4Q23,” the Paris-based agency said. 

“A deterioration in the macroeconomic outlook led to a downward revision in our global oil consumption growth forecast of nearly 400 kb/d in the final three months of the year”. 

Higher interest rates causing a weaker economy and soft European oil demand due to a manufacturing and industrial slump were cited as drivers of the downward revision. The agency now sees growth in 2023 at 2.3 million bpd. 

The IEA said that oil consumption growth “is expected to ease significantly” to 1.1 million bpd. But its 2024 demand forecast from today is around 130,000 bpd higher than earlier estimates of 930,000 bpd. 

The IEA also said that US supply growth “continues to defy expectations.” “The continued rise in output and slowing demand growth will complicate efforts by key producers to defend their market share and maintain elevated oil prices.” 

OPEC expects much higher oil demand growth for 2024 at 2.2 million bpd, for an average of 104.4 million bpd in global consumption next year, unchanged from the November assessment. 

“Oil demand is expected to be supported by resilient global GDP growth, amid continued improvements in economic activity in China,” the oil cartel said this week.

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