Oil: global demand will exceed expectations, says IEA – 12/14/2023 – Market

World oil demand will increase faster than expected next year, the IEA (International Energy Agency) said on Thursday (14), showing that the outlook for oil use in the short term remains robust despite the agreement of COP28 this week for a transition to less consumption of fossil fuels.

Despite the review of the scenario, there is still a considerable gap between the demand prospects for 2024 from the IEA, which represents industrialized countries, and OPEC (Organization of Petroleum Exporting Countries). The two entities have clashed in recent years over issues such as long-term demand and the need to invest in new supplies.

The agency forecasts that global consumption will increase by 1.1 million barrels per day (bpd) in 2024, an increase of 130,000 bpd over its previous forecast, citing an improved outlook for the United States and lower US prices. Petroleum.

The 2024 revision reflects “a slightly better GDP (gross domestic product) outlook compared to last month’s report,” the IEA said. “This is especially true in the US, where a soft landing is becoming visible”

“The fall in oil prices acts as an additional boost for oil consumption,” he said.

Oil weakened to a six-month low near $72 a barrel this week, even after OPEC+, which includes the oil-exporting nations of OPEC and allies such as Russia, on Nov. 30 announced a new round of cuts. of production for the first quarter of 2024.

In the report, the international agency also reduced its forecast for oil demand growth in 2023 by 90,000 bpd, to 2.3 million bpd, and lowered its estimate for the fourth quarter by almost 400,000 bpd.

The halving of the rate of demand expansion next year is due to below-trend economic growth in major economies, efficiency improvements and the expansion of the electric vehicle fleet, it said.

The extension of OPEC+ supply cuts until the first quarter of next year did little to boost prices and increased production in other countries would act as an obstacle, he added.