OPEC Forecasts Severe Oil Shortage in Q1 2024 Despite Curren Despite the recent decline in international crude oil prices, the Organization of the Petroleum Exporting Countries (OPEC) maintains a cautiously optimistic outlook on the market fundamentals for the future.
On December 13, OPEC released its December report on global oil demand, maintaining the 2023 global oil demand growth rate at 2.5 million barrels per day, with an anticipated increase of 2.2 million barrels per day in 2024.
OPEC stated that the growth in global demand this year is primarily driven by China and other non-OECD regions, with an expected increase of nearly 2.4 million barrels per day in these countries. Oil demand in OECD countries is projected to rise by 100,000 barrels per day this year.
In its monthly report, OPEC continues to predict a severe shortage in global oil supply for the next quarter, a forecast that contradicts OPEC's announcement last month of more substantial production cuts. The OPEC research department anticipates a significant shortfall of about 1.8 million barrels per day of oil in the first quarter of 2024. This comes after OPEC and its allies committed to further reducing the daily supply by 900,000 barrels starting January next year, potentially widening the expected gap.
OPEC's recent deepening of production cuts has not halted the decline in oil prices, as doubts persist about member countries' adherence to voluntary production cuts. Since late September, crude oil prices have fallen by about a quarter, with Brent crude currently priced at $73.88 per barrel.
Arne Lohmann Rasmussen, head of risk management research at A/S Global, commented, "The oil market may face challenges until there is data to confirm OPEC's production cuts in the first quarter of next year."
Additionally, OPEC noted in its report that the economic growth of most major economies in the first three quarters of the year exceeded expectations. Consequently, OPEC forecasts a global economic growth rate of 2.9% for 2023. The organization also expects this robust economic growth to continue into 2024, with a projected global growth rate of 2.6%. OPEC believes that these positive economic growth forecasts for 2023 and 2024 will play a decisive role in driving global oil demand growth.
Regarding inventories, OPEC reported that preliminary data from October 2023 indicates a month-over-month decrease of 12.8 million barrels in OECD commercial oil inventories, totaling 2.818 billion barrels. This is 128 million barrels lower than the average from 2015-2019.
In terms of supply, OPEC expects non-OPEC supply to increase by 1.8 million barrels per day in 2023, with the United States accounting for about 70% of this growth. For 2024, non-OPEC supply is projected to grow by 1.4 million barrels per day year-over-year. Factors contributing to this increase include rising U.S. shale oil production, the launch of projects in Latin America and the North Sea, and the expansion of Canadian oil sands projects.