Both OPEC and the IEA revised their oil demand forecasts downwards again this week, Commerzbank commodity analyst Carsten Fritsch notes.
Oil market to face a significant oversupply next year
“OPEC now expects an increase of 1.9 million barrels per day this year and 1.7 million barrels per day next year. That is 100,000 barrels per day less than the previous forecast in each case. Nevertheless, OPEC remains much more optimistic than the IEA. This year’s downward revision is due to China, for which OPEC expects demand to rise by 580,000 barrels per day, while the IEA expects only 150,000 barrels per day.”
“The IEA also expects demand in China to grow only slightly more next year, by 220,000 barrels per day. In light of the data published this week on Chinese crude oil imports and processing, we consider the IEA’s lower forecast to be more realistic. In September, crude oil imports were lower than a year ago for the fifth consecutive month, while crude oil processing was lower for the sixth consecutive month.”
“Based on OPEC’s demand forecast, the oil market would be significantly under supplied this year and next, even if the voluntary production cuts by OPEC+ were to be gradually withdrawn as planned from December. By contrast, based on the IEA forecasts, the oil market would face a significant oversupply next year.”