Morning Market Brief: June 12, 2024

OPEC optimistic about demand in 2024

In its latest monthly report, the Organization of the Petroleum Exporting Countries (OPEC) has maintained its oil demand forecasts for 2024. Although demand was revised down for the first quarter of 2024, this was offset by increased expectations in the second half of 2024. In terms of global economic growth, the agency is predicting 2.8% in 2024, followed by 2.9% in 2025. Uncertainty about China’s economic trajectory and US monetary policy has raised concerns about oil demand fluctuations.?

• OPEC maintained its oil demand growth forecast of 2.25 million barrels per day (bpd) in the second half of 2024. The organization is in the middle of its latest oil production cut that it plans to phase out from October.
• Transport activity is expected to contribute to demand. As summer economic activity and tourism create more transportation needs, oil demand is expected to pick up.
• Oil consumption was lower than expected in the first quarter of 2024. However, the agency highlighted that the global services sector, supported by travel and tourism, boosts oil demand.
• The clean energy transition is leading to diverging oil demand forecasts. Views have diverged partially due to uncertainty regarding the industry's adoption of clean energy.
• Updated International Energy Agency (IEA) forecasts will be released today. Previously, the IEA has been more conservative than OPEC, predicting oil demand to increase by 1.1 million bpd.

While OPEC is positive about steady global economic growth, concerns remain that higher summer demand and production cuts will lead to a deficit. OPEC members have released plans to lift supply from October. Market attention will quickly turn to May US inflation data and the macroeconomic remarks from the Federal Open Market Committee meeting, which concludes today. US economic resilience will be in the spotlight.

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