Crude oil market: current supply-demand tension
2024-07-25
■ The crude oil market is facing a tight supply-and-demand situation, and WTI crude oil prices are expected to be supported.
■ With the change in the US presidential election results, the demand and supply of crude oil are expected to change, which may impact WTI.
As of July, international organizations have released global crude oil demand and supply forecasts. Regarding the growth in global crude oil demand, the Organization of the Petroleum Exporting Countries (OPEC) continues to predict an increase of 2.25 million barrels per day in 2024 (from 122.1 million barrels in 2023 to 144.6 million barrels in 2024) and an increase of 1.85 million barrels per day (163.1 million barrels) in 2025. The US Energy Information Administration (EIA) has revised the increase for 2024 to 1.11 million barrels (from 118 million barrels in 2023 to 129.1 million barrels in 2024) and also revised the increase for 2025 to 1.77 million barrels (146.8 million barrels). The International Energy Agency (IEA) has revised the growth rate for 2024 to 1 million barrels (from 121 million barrels in 2023 to 131 million barrels in 2024) and for 2025 to 900000 barrels (140 million barrels). Although there is consensus on the moderate expansion of demand, OPEC remains optimistic based on economic growth in China and India. At the same time, IEA believes that factors such as weak domestic demand, improved energy efficiency, and electrification in China will slow crude oil demand growth.
Regarding the growth of global crude oil supply, EIA has extended the coordinated production reduction framework until the end of 2025 by decision and revised the growth rate for 2024 to 640000 barrels (from 117.9 million barrels in 2023 to 124.3 million barrels in 2024), while also revising the growth rate for 2025 to 2.17 million barrels (146 million barrels). The IEA has revised the growth rate for 2024 to 800000 barrels (from 122 million barrels in 2023 to 130 million in 2024) and for 2025 to 1.8 million barrels (148 million barrels). Based on the above data, there is expected to be excess demand for global crude oil in 2024, while the EIA predicts slightly excess demand in 2025, and the IEA predicts oversupply.
The market expects that the OPEC+ Joint Ministerial Monitoring Committee (JMMC) meeting on August 1st will unlikely recommend changes to the current production policy. Considering factors such as summer vacation and potential hurricanes, market supply and demand will further tighten, supporting WTI crude oil futures prices. In addition, if former President Trump is re-elected, he may withdraw from the global decarbonization agreement, increasing the US crude oil supply and potentially disrupting the pace of production cuts. On the contrary, if measures such as tax cuts are implemented to promote the recovery of the US economy, it will strengthen the market's expectations for the growth of crude oil demand. Therefore, US factors may influence crude oil demand expectations, and caution should be maintained.
■ With the change in the US presidential election results, the demand and supply of crude oil are expected to change, which may impact WTI.
As of July, international organizations have released global crude oil demand and supply forecasts. Regarding the growth in global crude oil demand, the Organization of the Petroleum Exporting Countries (OPEC) continues to predict an increase of 2.25 million barrels per day in 2024 (from 122.1 million barrels in 2023 to 144.6 million barrels in 2024) and an increase of 1.85 million barrels per day (163.1 million barrels) in 2025. The US Energy Information Administration (EIA) has revised the increase for 2024 to 1.11 million barrels (from 118 million barrels in 2023 to 129.1 million barrels in 2024) and also revised the increase for 2025 to 1.77 million barrels (146.8 million barrels). The International Energy Agency (IEA) has revised the growth rate for 2024 to 1 million barrels (from 121 million barrels in 2023 to 131 million barrels in 2024) and for 2025 to 900000 barrels (140 million barrels). Although there is consensus on the moderate expansion of demand, OPEC remains optimistic based on economic growth in China and India. At the same time, IEA believes that factors such as weak domestic demand, improved energy efficiency, and electrification in China will slow crude oil demand growth.
Regarding the growth of global crude oil supply, EIA has extended the coordinated production reduction framework until the end of 2025 by decision and revised the growth rate for 2024 to 640000 barrels (from 117.9 million barrels in 2023 to 124.3 million barrels in 2024), while also revising the growth rate for 2025 to 2.17 million barrels (146 million barrels). The IEA has revised the growth rate for 2024 to 800000 barrels (from 122 million barrels in 2023 to 130 million in 2024) and for 2025 to 1.8 million barrels (148 million barrels). Based on the above data, there is expected to be excess demand for global crude oil in 2024, while the EIA predicts slightly excess demand in 2025, and the IEA predicts oversupply.
The market expects that the OPEC+ Joint Ministerial Monitoring Committee (JMMC) meeting on August 1st will unlikely recommend changes to the current production policy. Considering factors such as summer vacation and potential hurricanes, market supply and demand will further tighten, supporting WTI crude oil futures prices. In addition, if former President Trump is re-elected, he may withdraw from the global decarbonization agreement, increasing the US crude oil supply and potentially disrupting the pace of production cuts. On the contrary, if measures such as tax cuts are implemented to promote the recovery of the US economy, it will strengthen the market's expectations for the growth of crude oil demand. Therefore, US factors may influence crude oil demand expectations, and caution should be maintained.