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Takeaways from the Key Notes
- Although the International Energy Agency (IEA), on Thursday, raised its projected growth for oil demand in 2025, it noted that demand overall remains weak.
- The projections follow moves by OPEC+ members to keep output cuts until the end of March.
- The IEA is forecasting the oil glut to widen if OPEC+ unwinds the output cuts.
Although the International Energy Agency (IEA), on Thursday, raised its projected growth for oil demand in 2025, it noted that demand overall remains weak.
The Paris-based agency said that oil markets are still dealing with a supply glut, and demand from China—which is weathering an economic downturn—”has slowed markedly.”
The IEA has now revised its forecast for global oil demand growth to 1.1 million barrels a day (B/D) from the previous forecast of “just shy of” One million B/D in the next year.
Estimates for 2008 have been cut to 840,000 B/D.
OPEC+ Members Recently Extended Output Cuts
Forecast comes a few days after the Organization of the Petroleum Exporting Countries, and their allies (OPEC+), announced that voluntary production cutbacks of 2.2 Million B/D will continue until the last day of March.
Still "persistent overproduction from some OPEC+ members, robust supply growth from non-OPEC+ countries and relatively modest global oil demand growth" have led to an oil glut, the agency said. If the OPEC+ alliance unwinds the cuts starting at the end of March, world oil markets will see an increased "overhang" of 1.4 million B/D, the IEA said.
“While the market is closely assessing ongoing geopolitical tensions and evolving OPEC+ supply dynamics, the bigger question for 2025 remains global oil demand,” The IEA noted that the “abrupt halt to Chinese oil demand growth this year,” As well as “sharply lower increases” In some developing nations “has tilted consensus towards a softer outlook.”
Brent crude futures are flat at $73.51 a barrel Thursday, while West Texas Intermediate futures are little changed at $70.28 a barrel.
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