OPEC sticks to 2024 oil demand view

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In June, the OPEC Reference Basket (ORB) declined slightly by 37¢, or 0.4%, m-o-m, to average $83.22/b. The ICE Brent front-month contract was unchanged, m-o-m, at $83.00/b, while the NYMEX WTI front-month contract slightly increased by 8¢, or 0.1%, m-o-m, to average $78.70/b. The DME Oman front-month contract declined by $1.05, m-o-m, or 1.3%, m-o-m, to settle at $82.69/b. The front-month ICE Brent/NYMEX WTI spread narrowed in June by 8¢, m-o-m, to average $4.30/b. The price structure of ICE Brent and NYMEX WTI strengthened. Money managers turned less bearish about oil, as selling pressure eased.

World Economy

The world economic growth forecast is revised up slightly to 2.9% for 2024, but remained unchanged at 2.9% for 2025. For the US, economic growth forecasts for both 2024 and 2025 remain unchanged at 2.2% and 1.9%, respectively. The economic growth forecast for the Eurozone is revised up slightly to stand at 0.7% for 2024, with 2025 unchanged at 1.2%. Japan’s economic growth forecast remain unchanged at 0.3% and 0.9% for 2024 and 2025, respectively. China’s 2024 economic growth forecast is revised up slightly to 4.9%, while the 2025 forecast remains at 4.6%. India’s economic growth forecast is unchanged for both 2024 and 2025, at 6.6% and 6.3%, respectively. Brazil’s economic growth forecast is unchanged at 1.8% for 2024 and 1.9% for 2025. Russia’s economic growth forecasts for 2024 and 2025 are revised up slightly to 3.1% and 1.5%, respectively.

World Oil Demand

The 2024 global oil demand growth forecast remains at 2.2 mb/d, unchanged from last month’s assessment. The OECD oil demand in 2024 is expected to expand by around 0.2 mb/d, while the non-OECD is forecast to grow by around 2.1 mb/d. In 2025, global oil demand is expected to see robust growth of 1.8 mb/d, y-o-y, also unchanged from the previous month’s assessment. The OECD oil demand is expected to grow by 0.1 mb/d, y-o-y, while the non-OECD demand is forecast to expand by 1.7 mb/d.

World Oil Supply

Non-Declaration of Cooperation (DoC) liquids supply (i.e., liquids supply from countries not participating in the DoC) is expected to grow by 1.2 mb/d in 2024, unchanged from the previous month’s assessment. The main growth drivers are expected to be the US, Canada and Brazil. In 2025, non-DoC liquids supply growth is forecast at 1.1 mb/d, also unchanged from the previous month’s assessment. The growth is anticipated to be mainly driven by the US, Brazil, Canada and Norway. Separately, DoC natural gas liquids (NGLs) and non-conventional liquids are forecast to grow by about 0.1 mb/d to average 8.3 mb/d in 2024, followed by an increase of about 25 tb/d, reaching 8.4 mb/d in 2025. Crude oil production by the countries participating in the DoC dropped by 125 tb/d in June compared to the previous month, averaging about 40.80 mb/d, as reported by available secondary sources.

Product Markets and Refining Operations

In June, refinery margins continued to retract in the Atlantic basin. This marked the fourth consecutive monthly decline as refiners increased product output, with gasoline leading the losses due to ample availability. This was despite a robust gasoil crack spread performance in the USGC. In contrast, margins in Singapore reversed direction, with gains driven by middle distillates, naphtha and high sulphur fuel oil. The upturn in Southeast Asia reflected the increase in planned and unplanned maintenance within the region.

Tanker Market

Dirty spot freight rates showed mixed movements across classes. The VLCC spot freight rates declined, amid lower flows from the Middle East. The Middle East-to-East route freight rates fell by 25%, m-o-m, while the West Africa-to-East route fell by 19%. Meanwhile, Suezmax freight rates rose on monitored routes, with a mo-m gain of 10% on the USGC to Europe route, amid higher flows out of Houston. Aframax freight rates declined around the Mediterranean, with the intra-Med route down 18%, while the Indonesia-to-East route strengthened by 5%, amid higher flows to Thailand and Malaysia. In the clean tanker market, freight rates were broadly flat East of Suez, while West of Suez rates fell 23%, amid still sluggish product demand in Europe and soft economics for flows to North America.

Crude and Refined Product Trade

In June, US crude imports surged for the third consecutive month to average 7.3 mb/d, according to preliminary data, representing a more than five-year high. For the first time in seven months, US crude exports fell below 4 mb/d, averaging 3.8 mb/d. US product exports jumped by 6%, m-o-m, to average 6.8 mb/d, the second highest on record, amid higher flows to Asia, Latin America and Europe. The latest data for China shows crude imports averaged 11.1 mb/d in May, a m-o-m increase but some 9% lower compared to the same month last year. China’s product imports fell from high levels seen in the previous month to average 2.4 mb/d, as independent refiners reduced inflows of refinery feedstocks. India’s crude imports in May declined from a twoyear high to average 5.1 mb/d, as product consumption was elevated by the election activities. India’s product imports tapered slightly to average 1.1 mb/d, amid lower inflows of fuel oil. Japan’s crude imports fell to a 34-month low of 2.1 mb/d in May as the weaker yen slowed buying, amid muted demand. Japan’s product exports also declined m-o-m, driven by lower outflows of gasoil and fuel oil. Preliminary estimates indicate OECD Europe crude imports fell m-o-m in May, amid refinery maintenance and lacklustre product demand in the region. Product imports into the OECD region were seen to decline in May due to lower inflows of jet fuel and diesel.

Commercial Stock Movements

Preliminary May 2024 data shows a build in total OECD commercial oil stocks by about 24.7 mb, m-o-m, reaching 2,813 mb. This is about 142 mb below the 2015–2019 average. Within the components, crude stocks fell by 5.4 mb, while product stocks rose by 30.1 mb, m-o-m. OECD commercial crude stocks stood at 1,366 mb in May. This is 120 mb less than the 2015-2019 average. OECD total product stocks stood at 1,447 mb in May. This is 23 mb below the 2015–2019 average. In terms of days of forward cover, OECD commercial oil stocks increased in May by 0.3 days, m-o-m, to stand at 60.6 days. This is 1.4 days less than the 2015-2019 average.

Balance of Supply and Demand

Demand for DoC crude (i.e., crude from countries participating in the DoC) in 2024 is revised down slightly by 0.1 mb/d from the previous month’s assessment to stand at 43.1 mb/d, which is around 0.9 mb/d higher than the estimate for 2023. This revision is mainly due to higher supply historical data. Demand for DoC crude in 2025 is revised down by 0.1 mb/d from the previous month’s assessment to stand at 43.9 mb/d, which is around 0.7 mb/d higher than the estimate for 2024. Again, this revision is due to higher supply historical data.

Source: OPEC