OPEC Holds Oil Demand View Steady, Raises 2024 Economic Forecast
Summary
OPEC left its estimates for global oil-demand growth unchanged, but raised its economic forecast for this year further amid falling inflation and anticipated interest-rate cuts.
The Organization of the Petroleum Exporting Countries left its estimates for global oil-demand growth unchanged, but raised its economic forecast for this year further amid falling inflation and anticipated interest-rate cuts.
In its monthly report, the Vienna-based cartel said it continues to expect oil demand to grow by 2.2 million barrels a day this year and by 1.8 million barrels a day in 2025, unchanged from its previous estimates.
The group raised its global economic-growth forecast for this year to 2.8% from 2.7% previously, supported by strong growth dynamics in China, India, and the U.S. The economic-growth forecast for next year was left unchanged at 2.9%.
“The anticipation of a positive, steady dynamic across major economies is supported by expectations for a continued easing in general inflation throughout 2024 and into 2025," OPEC said on Tuesday. “This is anticipated to lead to an increase in real income levels and improved consumer spending ability."
Meanwhile, central banks are expected to start cutting interest rates from the second half of the year throughout 2025, according to the cartel.
OPEC raised U.S. economic-growth estimates for this year to 1.9% from 1.6% previously and kept them at 1.7% for 2025. The eurozone growth forecast remains unchanged at 0.5% this year and 1.2% the next.
The cartel’s latest report comes as crude futures continue to trade a tight trading range amid conflicting market forces, with concerns over slowing Chinese demand and the path of U.S. interest-rate cuts capping gains sparked by signs of tightness in the physical markets, OPEC+’s extensions of output curbs and geopolitical risks in the Middle East.
Brent crude, the international benchmark, currently trades around $82 a barrel, while WTI, the U.S. oil gauge, is at around $78 a barrel.
Despite continuing cuts by Saudi Arabia and other members, OPEC produced more crude oil in February on higher output from Libya and Nigeria. Overall, the cartel’s crude-oil production rose by 203,000 barrels a day to 26.57 million barrels a day compared with January levels, it said, citing secondary sources.
Oil production from Libya increased by 144,000 barrels a day to 1.17 million barrels a day, while Nigeria’s production rose by 47,000 barrels a day to 1.48 million barrels a day. Saudi oil production rose by 18,000 barrels a day to 8.98 million barrels a day.
OPEC and its allies this month agreed to extend voluntary output cuts of around 2.2 million barrels a day into the second quarter of the year in an effort to avert global surplus and support prices, and are expected to decide on policy for the second half at a ministerial meeting in June.
The group cut its non-OPEC supply growth forecast to 1.1 million barrels a day for 2024 from 1.2 million barrels a day previously, saying the largest declines in supply growth are expected in Russia and Mexico. Growth expectations for 2025 were instead raised to 1.4 million barrels a day from 1.3 million barrels a day in the previous month’s forecast.
The International Energy Agency is due to release its monthly report on Thursday.
Write to Giulia Petroni at giulia.petroni@wsj.com
