IEA cuts forecasts for oil demand in 2024

The International Energy Agency (IEA) has slashed its oil demand forecast for 2024 as a result of poor industrial activity and mild winter temperatures, which have sapped gasoil consumption so far this year.

The IEA's monthly Oil Market Report for May projects oil demand will rise by 1.1m barrels of oil per day (b/d) this year, down 140,000b/d on its April forecast, as weak deliveries, especialy in Europe, moved OECD demand into contraction in the first quarter.

Following a 210,000b/d annual contraction in 2023, European gasoil demand fell by a further 140,000b/d year-on-year in the first quarter.

"Combined with weak diesel deliveries in the United States at the start of the year, this was enough to tip OECD oil demand in the first quarter back into contraction," the report said.

OPEC+ crude oil production totalled 41.43m b/d in April, down from 41.52m b/d in March. However, output is expected to rise to around 42m b/d in the second half of the year.

Looking ahead to 2025, the agency is expecting demand to be higher than 2024 at 1.2m b/d, up from an earlier forecast of 1.1m b/d.

The IEA said the market looks "more balanced overall". "Even if OPEC+ voluntary production cuts were to stay in place, global oil supply could jump by 1.8 mb/d compared with this year’s more modest 580 kb/d annual increase," the IEA said.