The Organization of the Petroleum Exporting Countries (OPEC) has cut its global oil demand growth forecast for the third consecutive month, citing persistent economic uncertainties and weakened market sentiment.
China accounted for most of the downgrade, with OPEC trimming its Chinese oil demand growth forecasts to 580,000 bpd from an earlier forecast of 650,000 bpd.
“Worries of slowing demand in China persisted amid weak refining margins and the prospect of the Autumn refinery maintenance season,” OPEC wrote in the report. The group noted that early in September, oil futures prices fell to multi-month lows—amid a broader decline in financial markets.
“Uncertainty about the significance of the U.S. interest rate cut dampened overall sentiments and economic optimism. The release of weak U.S. manufacturing data for August heightened economic concerns. Market sentiment was also affected by concerns about China’s economic outlook,” the group noted.
October’s oil growth forecast downgrade is the third since August. Prior to that, OPEC had kept it unchanged since July 2023.
The group attributed the overall downward adjustment to its 2024 oil demand growth forecasts to lower-than-expected consumption and slowing demand in some markets, along with elevated economic uncertainties.
“Downside risks, including geopolitical uncertainties, high sovereign debt, elevated real interest rates, and tight labour markets, may weigh on near-term growth,” OPEC wrote.
Despite the downgrade, OPEC noted that the 1.9 million bpd growth forecast for 2024 is still higher than the pre-pandemic historical average of 1.4 million bpd.
For 2025, OPEC cut its global oil demand growth estimate to 1.64 million bpd from 1.74 million bpd.
Both U.S. and Brent crude oil futures fell over 2 percent on the day of the report’s release.
On Saturday, Beijing pledged to “significantly increase” debt in its attempt to stimulate China’s economy, but disappointed investors with its lack of detail.
This was followed on Monday by a report showing a sharp deceleration in Chinese export growth, which missed expectations by a wide margin.
“China is having economic difficulties,” said Sam Stovall, chief investment strategist of CFRA Research in New York. “Oil prices are another indication of lack of confidence that China will be able to pull itself up by its own boot straps, primarily because the stimulus details are so sketchy.”
While oil dipped, U.S. stocks ended the trading day higher on Oct. 14, with the benchmark S&P 500 and blue-chip Dow both rising to fresh record closing highs.
The Dow Jones Industrial Average rose 203.14 points, or 0.47 percent, to 43,067.00, the S&P 500 rose 45.17 points, or 0.78 percent, to 5,860.20, and the Nasdaq Composite rose 159.75 points, or 0.87 percent, to 18,502.69.
European shares reached a two-week high at the close Monday’s trading session as investors focused on earnings season and a European Central Bank policy meeting due later this week.
