Oil demand outlook boosts Brent and WTI prices – London Business News

The oil market has seen a significant rebound over the past week, with Brent and WTI prices up nearly 4%.

It marks the biggest weekly percentage gain since April, reflecting renewed confidence in crude oil and fuel demand in 2024.

Several factors have contributed to this growth, including optimistic demand growth forecasts and supply dynamics shaping the global energy market landscape.

The US Energy Information Administration (EIA) has revised upward its forecast for oil demand growth for next year. This upbeat review suggests a robust market, supported by the expectation of continued economic recovery and increased industrial activity.

While the EIA did not specify how much demand would increase, this upward adjustment is in line with rising global energy demand as economies strive to revive their productive sectors following recent challenges.

On the other hand, the Organization of the Petroleum Exporting Countries (OPEC) maintained its forecast of solid oil demand growth, estimated at 2.2 million barrels per day (bpd) for 2024.

OPEC’s optimism reflects confidence that global oil demand will continue to grow, driven by the development of emerging markets and Asian economic growth. However, this forecast comes in the context of production controls by member countries, which could limit available supply and contribute to upward pressure on prices.

In contrast, the International Energy Agency (IEA) took a more cautious view. The IEA cut its demand growth forecast to less than 1 million bpd, citing economic uncertainty in major economic regions and the ongoing energy transition to more sustainable sources. This difference in forecasts between major energy agencies highlights the inherent complexity and volatility of the oil market, where economic and political factors can quickly change expectations.

In addition to demand forecasts, analysts highlighted the potential supply shortfall until the start of winter. This shortfall results from limited production by OPEC and other major producers and lower-than-usual inventory levels. While demand for oil and fuel is expected to remain strong, supply constraints could balance the market and keep prices in a high range, preventing significant increases in the near term.

In conclusion, the recent rise in Brent and WTI prices reflects the complexity of the supply and demand dynamics in the oil market. With diverging forecasts from EIA, OPEC and IEA, the market faces an uncertain future, where demand fluctuations and potential supply shortfalls will play a crucial role. As 2024 unfolds, attention will turn to how global economies address these challenges and to what extent energy demand can support the recovery of the oil market.