IEA: World oil demand growth continues to decelerate
World oil demand growth continues to decelerate, with second-quarter 2024 growth dropping to 710,000 b/d year-on-year, marking the slowest quarterly increase since fourth-quarter 2022, according to the International Energy Agency (IEA)’s July Oil Market Monthly Report.
Chinese consumption contracted as the country's post-pandemic rebound has run its course. IEA’s forecasts indicate global oil demand gains will average just under 1 million b/d in 2024 and 2025, hindered by weaker economic growth, improved efficiencies, and increased vehicle electrification.
“Oil consumption in China, long the engine of global oil demand growth, contracted in both April and May, and is now assessed marginally below year earlier levels in second-quarter 2024. That stands in stark contrast to annual gains of 1.5 million b/d in 2023 and 740,000 b/d in first-quarter 2024. Demand for industrial fuels and petrochemical feedstocks was particularly weak,” said IEA.
“By contrast, second-quarter delivery data of gasoil and naphtha for OECD economies came in higher than expected, potentially signaling a budding recovery in Europe’s ailing manufacturing sector. While the bounce temporarily pushed quarterly OECD demand growth back into positive territory, non-OECD countries will account for all this year’s global gains. World oil demand growth expectations for the 2024 and 2025 are largely unchanged at 970,000 b/d and 980,000 b/d, respectively”, said IEA.
In June, global supply increased by 150,000 b/d to reach 102.9 million b/d, due to reduced field maintenance and a rise in biofuels, countering a notable decline in Saudi output. Strong monthly gains pushed second-quarter 2024 output up by 910,000 b/d quarter-on-quarter. For third-quarter 2024, a growth of 770,000 b/d is expected, with non-OPEC+ contributing 600,000 b/d of the gains. Annual increases of 770,000 b/d are projected for 2024, with a further rise of 1.8 million b/d anticipated for 2025.
Global refinery throughputs are projected to increase by 950,000 b/d to 83.4 million b/d in 2024, and by 630,000 b/d to 84 million b/d in 2025. In May, weak demand and poor margins affected crude processing in China and Europe. June saw margins drop in the Atlantic Basin, nearing multi-year lows, while in Asia, they modestly rebounded as run cuts alleviated regional crude market tensions.
Benchmark crude oil prices bounced back from 6-month lows over the course of June after OPEC+ officials stated that unwinding voluntary production cuts would depend on market conditions, and as geopolitical risks remained high. ICE Brent futures rose by $5/bbl to $86/bbl by end-month.
Global observed oil inventories rose for a fourth consecutive month in May, by 23.9 million bbl. Offshore inventories drew by 17.3 million bbl while on-land stocks built by 41.3 million bbl to a 30-month high. OECD industry stocks rose by 27.8 million bbl to 2 845 million bbl but remained 69 million bbl below their 5-year average. Preliminary data show global oil stocks falling by 18.1 million bbl in June, dominated by crude while products built.
Conglin Xu | Managing Editor-Economics
Conglin Xu, Managing Editor-Economics, covers worldwide oil and gas market developments and macroeconomic factors, conducts analytical economic and financial research, generates estimates and forecasts, and compiles production and reserves statistics for Oil & Gas Journal. She joined OGJ in 2012 as Senior Economics Editor.
Xu holds a PhD in International Economics from the University of California at Santa Cruz. She was a Short-term Consultant at the World Bank and Summer Intern at the International Monetary Fund.
