OPEC Updates Global Oil Demand and Economic Growth Forecasts
The Organization of the Petroleum Exporting Countries (OPEC) recently released its monthly report, maintaining its estimates for global oil-demand growth but raising its economic forecast for the year. OPEC continues to expect oil demand to increase by 2.2 million barrels a day in 2024 and 1.8 million barrels a day in 2025. The group also raised its global economic-growth forecast for this year to 2.8% from 2.7% previously, citing strong growth dynamics in China, India, and the U.S.
The Organization of the Petroleum Exporting Countries (OPEC) recently released its monthly report, maintaining its estimates for global oil-demand growth but raising its economic forecast for the year. OPEC continues to expect oil demand to increase by 2.2 million barrels a day in 2024 and 1.8 million barrels a day in 2025. The group also raised its global economic-growth forecast for this year to 2.8% from 2.7% previously, citing strong growth dynamics in China, India, and the U.S.
Economic Outlook and Interest Rates
OPEC anticipates a positive economic dynamic across major economies, supported by expectations of easing general inflation in 2024 and 2025. This is expected to lead to an increase in real income levels and improved consumer spending ability. Central banks are also expected to start cutting interest rates in the second half of the year and continue throughout 2025.
Regional Economic Forecasts
The organization raised U.S. economic-growth estimates for this year to 1.9% from 1.6% and kept them at 1.7% for 2025. The eurozone growth forecast remains unchanged at 0.5% for this year and 1.2% for the next.
Market Trends and Production
Despite ongoing cuts by Saudi Arabia and other members, OPEC reported an increase in crude oil production in February due to higher output from Libya and Nigeria. Crude-oil production by the cartel rose by 203,000 barrels a day to 26.57 million barrels a day compared to January levels. Oil production from Libya increased by 144,000 barrels a day to 1.17 million barrels a day, while Nigeria's production rose by 47,000 barrels a day to 1.48 million barrels a day.
Policy Decisions and Output Cuts
OPEC and its allies recently agreed to extend voluntary output cuts of around 2.2 million barrels a day into the second quarter of the year to prevent a global surplus and support oil prices. They are set to decide on policy for the second half of the year at a ministerial meeting in June.
Non-OPEC Supply Growth Forecast
The group also adjusted its non-OPEC supply growth forecast, expecting a decline in supply growth in Russia and Mexico for 2024. However, growth expectations for 2025 were raised from 1.3 million barrels a day to 1.4 million barrels a day from the previous forecast.
In the midst of these developments, the International Energy Agency is scheduled to release its monthly report on Thursday.
Conclusion
OPEC's updated forecasts and market trends indicate a complex landscape for the oil industry, with shifting dynamics in both supply and demand. The organization's efforts to balance production levels and global economic conditions will continue to impact oil prices and market stability moving forward.
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