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OPEC Expects Global Oil Demand to Slow in 2025 – WSJ

An oil refinery in Feyzin, France. (Olivier Chassignole/AFP)
An oil refinery in Feyzin, France. (Olivier Chassignole/AFP)

Giulia Petroni, WSJ

EnergiesNet.com 01 19 2024

The Organization of the Petroleum Exporting Countries expects global oil demand to slow next year, even as it raised its economic forecast as easing inflation spurs global growth.

The Vienna-based oil-producers’ cartel said in its monthly oil-market report that it sees oil-demand growth at 1.8 million barrels a day in 2025, supported by a solid Chinese economy. The estimate is below this year’s demand growth forecast, which the group left unchanged at 2.2 million barrels a day.

OPEC anticipates global economic growth will pick up next year and reach 2.8% from an estimated 2.6% this year, as central banks are expected to cut interest rates starting from the second half of 2024.

“Non-OECD economies—including the key oil-consuming economies of China and India, along with other Asian developing economies—are set to continue their healthy growth levels and be responsible for a large part of next year’s global economic growth,” the group said Wednesday.

U.S. economic growth is forecast to rise to 1.5% in 2025 from an estimated 1% this year. In the eurozone, economic growth is expected at 1.2% in 2025 from 0.5% this year.

The cartel’s latest report comes as oil futures have slumped more than 20%, having approached $100 in September, with market sentiment divided between concerns over weaker economic growth and escalating tensions in the Middle East following a string of attacks from Iran-backed Houthis on commercial ships in the Red Sea.

Brent crude, the international benchmark, currently trades around $77 a barrel, after briefly touching $80 a barrel last week. WTI, the U.S. oil gauge, is trading around $71 a barrel.

“Crude oil futures prices extended their decline in December, reaching their lowest levels since late June,” OPEC said. “This downward trend was primarily driven by selling pressure from speculators, with a consistent increase in bearish positions observed among money managers.”

OPEC and its allies in November agreed to voluntary output cuts totaling around 2.2 million barrels a day over the first quarter of this year, in a move expected to shore up prices amid concerns over subdued demand and weaker economic growth.

Despite continuing cuts by Saudi Arabia and other members, the cartel produced more crude oil in December on higher output from Nigeria and Iraq.

Overall crude oil production increased by 73,000 barrels a day to 26.7 million barrels a day compared with November levels, the cartel said, citing secondary sources.

Oil production from Nigeria increased by 100,000 barrels a day to 1.42 million barrels a day in December from the previous month, while Iraq saw an increase of 23,000 barrels a day to 4.29 million barrels a day. Saudi oil production, however, fell by 12,000 barrels a day to 8.96 million barrels a day.

The group cut its non-OPEC supply growth forecast to 1.3 million barrels a day for 2024 from previous expectations of 1.4 million barrels a day, and said it expects growth to remain stable in 2025.

The International Energy Agency is due to release its monthly report on Thursday.

Write to Giulia Petroni at giulia.petroni@wsj.com

wsj.com 01 17 2024

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