The head of the Organization of the Petroleum Exporting Countries and allies downplayed forecasts of lower crude demand in the coming year, saying there was too much pessimism in the market, CNBC reported on Monday.
“Well, for OPEC, we have demand growth this year at 1.9 million barrels a day,” OPEC Secretary-General Haitham Al Ghais told CNBC on Monday at the Adipec energy conference in Abu Dhabi.
Al Ghais remains bullish on crude oil demand despite the cartel extending voluntary production cuts till the end of December on Sunday to shore up prices.
Al Ghais said OPEC’s forecasts for demand growth in crude oil could be interpreted as high by some, but independent researchers also share the cartel’s view.
Al Ghais noted:
Some have it at (what) we believe (are) very low levels. We’re still quite robust on demand.
Too much pessimism in the oil market?
Al Ghais told CNBC that there is too much pessimism about the demand outlook for crude oil. He said:
I think there’s a bit too much doom and gloom and pessimism in terms of the demand outlook by some corners in the market, in terms of analysts and research, but we believe, still, our numbers are in line with many other independents.
OPEC in October scaled back forecasts of growth in global oil demand by 106,000 barrels per day in 2024 and 102,000 barrels per day for 2025.
The cartel expects demand to grow by 1.93 million barrels per day this year, while it is likely to increase by 1.64 million barrels in 2025.
The outlooks are still higher than the International Energy Agency’s (IEA) forecasts. The Paris-based agency expects oil demand to grow by just under 900,000 barrels per day in 2024 and by 1 million barrels a day next year.
“We have lowered down our demand numbers, to be fair, in the last couple of months, by about 100,000 to 200,000 barrels a day,” Al Ghais told CNBC.
Nevertheless, we remain at 1.9 [million] and this is higher than the historical average, the pre-pandemic and even the post-pandemic recovery rate, which was around 1.2 million barrels per day.
Slowing oil demand in China
Forecasts of slowing oil demand come amid poor economic conditions in China. The slowing economy of China has hit oil demand significantly.
Imports of crude oil have slipped in China over the past few months, dragging down global prices.
China is the world’s largest importer of crude oil and the second largest consumer after the US.
Al Ghais told CNBC:
We have China growing at 0.6 million barrels a day this year … I think the outliers who are looking at China growing at 0.1 [million barrels a day] or hardly any growth, are the outliers. We are not the outliers.
He said that OPEC is bullish about the US economy and its oil demand. OPEC also sees “good signs in the petrochemical industry and aviation sector”.
However, analysts expect China’s oil demand growth to remain relatively weak in 2025 despite recent stimulus measures.
The measures announced in September failed to prop up the markets. Slowing demand since the COVID-19 pandemic and increasing adoption of electric vehicles have slashed oil consumption in the second-largest economy of the world.
OPEC extends voluntary oil output cuts
OPEC on Sunday agreed to extend the voluntary production cut of oil by another month till the end of December.
The cartel was supposed to unwind some of their voluntary production cuts from December. It was scheduled to raise output by 180,000 barrels per day from December.
However, oil prices have been volatile over the course of the last month with prices falling sharply after risks to supply from the Middle East subsided.
Brent crude oil on the Intercontinental Exchange fell to a one-month low of $70.72 per barrel, while West Texas Intermediate plunged below $70 per barrel.
“This is not the first time we delayed the increase, which is supposed to be phased in gradually … This is just a continuation of our policy of making sure that we’re very attentive to the market,” CNBC quotes Al Ghais in a report.
This is nothing unusual that has not been, let’s say, part of the modus operandi of OPEC+ since our agreement has been in place.
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