IEA cuts 2024 crude forecast as OECD Q1 demand slips into contraction
- Demand slows on global economic health concerns
- Refinery margins near two-year lows
- More balanced supply-demand expected in 2025
The IEA now expects global crude demand to slip to 1.1 million barrels/day this year, down from projections of 1.2 million barrels/day in its previous monthly oil forecast, and a further decline from the 1.3 million barrels/day projected in March.
The upward revisions seen in February and March were driven by higher demand expectations on the back of improved economic momentum, particularly for the US, with the agency predicting that the market could move into supply deficit.
Weaker-than-expected deliveries to OECD countries, particularly in Europe, drove demand from the bloc into the negative in Q1, according to the IEA, while pricing fell through the early spring as economic concerns outpaced the upward impact of geopolitical tensions.
Crude futures have fallen from over $90/barrel earlier in the year to $82.53 at midday Brent trading on Wednesday.
Refinery margins have also fallen to near a two-year low in the wake of a sell-off across many crude and downstream markets such as middle distillates.
“The slump in European refinery margins in April outpaced those seen in the US Gulf Coast and Singapore, reflecting its heavy reliance on diesel output and weak regional demand eroding the premium needed to attract long-haul imports from East of Suez,” the IEA said in its monthly report.
Despite declining demand expectations for 2024, supply growth is expected to be subdued, with a 1.4 million barrel/day increase in non-OPEC+ output offset by a projected 840,000 barrel/day decline in OPEC+ output, amounting to a total increase of 580,000 barrel/day.
The latest deliberations among OPEC member states and allied country ministers is expected at the start of June in Vienna, Austria, with decisions taken there potentially setting the tone for the second half of the year.
“Despite the recent weakness, our current balances show the call on OPEC+ crude oil at around 42 million barrels/day in the second half of this year – roughly 700,000 barrels/day above its April output,” the IEA added.
