OPEC cuts oil demand growth estimates as China’s economy struggles

Disappointing data so far this year and expectations of softening Chinese demand growth have prompted OPEC to cut its forecast for global oil demand growth this year and next, in the first downward revision since the organization issued its original estimate for 2024 a year ago.

Global oil demand is set to grow by 2.11 million barrels per day (bpd) in 2024, a still “healthy” pace of growth, well above the historical average of 1.4 million bpd seen before the pandemic, it said OPEC in the Monthly Oil Market Report. (MOMR) published on Monday.

But the latest estimate of demand growth is 135,000 bpd lower than July’s estimate of a 2.25 million bpd rise. The downward revision reflected actual consumption data for the first and second quarters of this year, “as well as softening expectations for China’s oil demand growth in 2024,” OPEC said.

Total global oil demand is forecast to reach 104.3 million bpd in 2024, supported by strong demand for air travel and road mobility, including trucking, as well as healthy industrial, construction and agricultural activity in non-OECD countries, according to the cartel.

OPEC also cut its demand growth forecast for 2025 to 1.78 million bpd, slightly lower than the 1.85 million bpd increase expected in last month’s report.

“The global growth forecast is subject to many uncertainties, including global economic developments,” OPEC said.

The latest monthly report contained the organization’s first admission that China’s oil demand growth could disappoint this year.

The latest signals from China have been of sluggish economic indicators and uncertainty over whether the authorities will be able to revive the economy.

Despite OPEC’s first downward revision to its oil demand growth forecast for 2024, the gap between the cartel’s growth assessment and that of the International Energy Agency (IEA) remains at a more optimistic outlook of more than 1 million barrels per day from OPEC.

The IEA’s monthly report is due on Tuesday, August 13, and could see another downward revision from the agency, which has signaled weaker growth in oil demand, including in China, so far this year.

By Tsvetana Paraskova for Oilprice.com

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