By Giulia Petroni
The International Energy Agency lifted next year's oil-demand estimates citing the impact of China's stimulus measures, but said the pace of growth is expected to remain subdued.
The Paris-based organization now forecasts global demand to grow by 1.1 million barrels a day in 2025 from 990,000 barrels a day previously. Estimates for this year were instead cut to 840,000 barrels a day from 921,000 barrels a day, largely due to lower-than-anticipated deliveries in China, Saudi Arabia and Indonesia.
Both forecasts are considerably lower than last year's growth of more than 2 million barrels a day, reflecting a weaker macroeconomic environment and shifts in oil consumption. The agency's projections also remain substantially below those of OPEC, which still sees demand growth at robust levels of 1.61 million barrels a day this year and 1.45 million barrels a day the next.
"The bigger question for 2025 remains global oil demand," the IEA said. "The abrupt halt to Chinese oil demand growth this year, along with sharply lower increases in other notable emerging and developing economies [...] has tilted consensus towards a softer outlook."
Chinese oil demand was flat on year in October, but fell compared with the previous month. The agency expects the top crude importer to register demand growth of 140,000 barrels a day in 2024 and 220,000 barrels a day in 2025, above previous estimates of a 190,000-barrels-a-day growth.
Total global demand is expected to average 102.8 million this year and 103.9 million barrels a day the next.
The IEA said its current market balance still indicates a 950,000 barrels a day supply surplus next year, even though the decision by the Organization of the Petroleum Exporting Countries and its allies to delay production hikes has materially reduced the potential overhang. If OPEC+ begins unwinding voluntary cuts from the end of March as planned, the surplus would increase to 1.4 million barrels a day.
Last week, OPEC and its allies further extended voluntary production cuts of 2.2 million barrels a day until the end of March, with producers now set to unwind those cuts over a period of 18 months
Thursday's IEA report comes as oil prices continue to be under pressure due to concerns over weaker demand trends in China and prospects of an oversupplied market next year. But turmoil in the Middle East after the fall of Syrian President Bashar al-Assad and China's pledge to boost stimulus have provided some support this week. Brent crude currently trades around $73 a barrel, while the U.S. oil gauge, West Texas Intermediate, is around $70 a barrel.
Meanwhile, global oil supply rose by 130,000 barrels a day in November, the IEA said, due to a continued recovery of Libyan and Kazakhstan output. Total supply is seen at an average of 102.9 million barrels a day this year and 104.8 million barrels a day next year.
Output from non-OPEC+ countries decreased last month due to seasonally weaker Brazilian biofuels production and the impact of hurricanes in the U.S. Gulf of Mexico, but overall supply growth is still projected at 1.5 million barrels a day in both 2024 and 2025.
Crude supply from OPEC+'s member countries rose by 310,000 barrels a day to 41.4 million barrels a day in November, led by the return of Libyan volumes to the market. Output from the 18 OPEC+ members subject to production quotas stood 680,000 barrels a day above their implied target, mainly due to Kazakhstan, according to IEA calculations.
Write to Giulia Petroni at giulia.petroni@wsj.com
(END) Dow Jones Newswires
12-12-24 0414ET
