OPEC keeps 2 MMbpd oil demand growth forecast steady despite extended production cuts

(Bloomberg) – OPEC kept forecasts for global oil demand broadly steady, even as the group and its allies chose to prolong their production restraints for another two months.

OPEC, while making some minor adjustments, still projects that world consumption will surge by 2 MMbpd this year — a figure much higher than other forecasters.

The organization’s bullish estimates are at odds with its decision last week to delay the restart of halted production until December. And they jar with a slump in oil prices, which plunged on Friday to the lowest closing level since 2021 amid concern over Chinese economic growth. Brent futures are trading near $71 a bbl.

Led by Saudi Arabia and Russia, the 23-nation OPEC+ alliance has been retraining production since late 2022 in a bid to shore up prices, but now seeks to return the bbls to market.

Based on the report from its Vienna-based research department, the restart ought to be urgently needed. OPEC’s data suggest that world inventories should be depleting rapidly now and — unless the group opens the taps — face a substantial shortfall of more than 3 MMbpd in the fourth quarter.

The group’s actions suggest a lack of confidence in its own numbers, and not for the first time. Late last year it also projected an unprecedented supply deficit, but instead Brent collapsed 19% and the group felt compelled to agree new cutbacks.

Among the biggest revisions in this month’s report was a reduction of 300,000 bpd to the forecast for global oil consumption during the first quarter of 2025. OPEC expects that demand will average 104.6 MMbpd during the period.