OPEC Reduces Oil Demand Growth Prediction for Third Consecutive Month Due to Economic Uncertainty and Weak Market Sentiment
China accounted for most of the downgrade in projected demand, according to the
The Organization of the Petroleum Exporting Countries (OPEC) has reduced its forecast for global oil demand growth for the third month in a row, citing ongoing economic uncertainties and weakened market sentiment.
OPEC attributed this downward revision mainly to China, where it adjusted its oil demand growth forecast to 580,000 bpd from the earlier estimate of 650,000 bpd.
“Worries about weakening demand in China persist due to poor refining margins and the upcoming Autumn refinery maintenance season,” OPEC stated in the report. The group mentioned that in early September, oil futures prices dropped to multi-month lows along with a wider downturn in financial markets.
“Uncertainty surrounding the significance of the U.S. interest rate cut dampened overall sentiment and economic confidence. Weak U.S. manufacturing data for August further heightened economic concerns. Market sentiment was also impacted by apprehensions about China’s economic outlook,” OPEC explained.
This October revision marks the third decrease in oil growth forecasts since August, after being unchanged since July 2023.
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The group stated that the downward revision to its 2024 oil demand growth forecasts was due to lower consumption than anticipated and diminishing demand in certain markets, alongside increased economic uncertainties.
“Potential risks such as geopolitical uncertainties, high sovereign debt, rising real interest rates, and tight labor markets could impact short-term growth,” OPEC noted.
Despite the revision, OPEC highlighted that the 1.9 million bpd growth projection for 2024 still exceeds the pre-pandemic historical average of 1.4 million bpd.
For 2025, OPEC adjusted its global oil demand growth estimate to 1.64 million bpd from 1.74 million bpd.
Both U.S. and Brent crude oil futures dropped over 2% on the day of the report’s release.
Over the weekend, Beijing announced plans to significantly increase debt to boost the Chinese economy, but investors were disappointed by the lack of specifics.
This was followed by a report on Monday showing a substantial slowdown in Chinese export growth, falling well below expectations.
“China is facing economic challenges,” said Sam Stovall, chief investment strategist at CFRA Research in New York. “Oil prices reflect concerns about China’s ability to recover, mainly due to the lack of clarity on stimulus measures.”
While oil prices declined, U.S. stocks closed higher on Oct. 14, with both the S&P 500 and Dow reaching new record highs.
The Dow Jones Industrial Average climbed 203.14 points, or 0.47%, to 43,067.00, the S&P 500 rose 45.17 points, or 0.78%, to 5,860.20, and the Nasdaq Composite increased by 159.75 points, or 0.87%, to 18,502.69.
European shares also hit a two-week high on Monday, focusing on earnings season and an upcoming European Central Bank policy meeting later in the week.
Reuters contributed to this report.
