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The latest market forecasts from the world’s oil producer and consumer groups might as well be describing two different planets. Which one OPEC+ ministers believe they inhabit will be crucial for their production decision in June.
The International Energy Agency is relatively downbeat on the outlook for demand. On Friday, it trimmed its 2024 forecast by 100,000 barrels a day and cut first-quarter consumption estimates by three times that amount.
In contrast, analysts at the Organization of Petroleum Exporting Countries see “robust” oil needs for the summer months.
The IEA’s forecast suggests OPEC+ needs to keep a tight grip on supply, especially as output grows among producers outside the alliance’s control.
While the consumer group foresees short-lived tightness during the summer — with OPEC crude production falling short of demand by as much as 400,000 barrels a day — the market will be back in balance by the final quarter, it says.
The producers’ analysts have a very different view. Their outlook points to a much clearer need for OPEC+ to relax supply restrictions.
OPEC Forecasts a Tight Oil Market
Latest forecasts of production increase from the March level needed to balance supply and demand
They left their strong outlook for 2024 unchanged, while tweaking quarterly estimates. Their forecast for 2.25 million barrels a day of demand growth this year puts them right at the top of the range of estimates.
Part of the reason is that the analysts expect production growth outside the core OPEC countries to drop to 1.2 million barrels a day, down by about 100,000 barrels a day from last month. The revision, driven by a lower estimate for the US, isn’t huge but leaves the group’s output even further behind what’s needed to balance the market and keep inventories steady.
A supply shortfall that rises to more than 2 million barrels a day prompted the analysts to write that the “outlook for the summer months warrants careful market monitoring.”
Of course, monitoring doesn’t necessarily mean action.
We’ll have to wait until the start of June, with another round of monthly reports to come before then, to see if OPEC+ ministers believe the world needs more of their oil.
–Julian Lee, Bloomberg News
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