The Oil Market Report for the month of October 2024 by the International Energy Agency (IEA), explores several key factors that are shaping the oil industry in 2024 and 2025.
As explained by IEA, world oil demand is on track to expand by just shy of 900,000 barrels per day (kb/d) in 2024 and close to 1 million barrels per day (mb/d) in 2025. However, this marks a sharp slowdown compared to the roughly 2 mb/d seen over the 2022-2023 post-pandemic period. Notably, China underpins the deceleration in growth, accounting for around 20% of global gains both this year and next year, compared to almost 70% in 2023.
Moreover, global oil supply plunged by 640 kb/d in September to 102.8 mb/d. This decline was significantly impacted by Libya’s political quagmire, which disrupted the country’s oil production and exports. Additionally, maintenance work in Kazakhstan and Norway lowered output. In contrast, non-OPEC+ supply growth of around 1.5 mb/d this year and next is primarily led by the Americas, accounting for 80% of the overall gains.
Meanwhile, refining margins slumped further in September as gasoline, jet, and diesel cracks deteriorated. Although crude prices improved due to a relatively tighter market, global crude run estimates were subsequently reduced by 180 kb/d to 82.8 mb/d for 2024 and by 210 kb/d to 83.4 mb/d in 2025. Consequently, this represents annual gains of 540 kb/d and 610 kb/d, respectively.
In addition, observed global oil inventories declined by 22.3 mb in August, led by a 16.5 mb draw in crude oil stocks. Notably, OECD industry stocks fell counter-seasonally by 13.4 mb to 2,811 mb, which is 102.7 mb below the five-year average. Preliminary data suggest that oil stocks fell further in September. This decline is underpinned by relatively robust refining activity and OPEC+ supply cuts, resulting in a 135 mb draw in crude stocks since May, while product stocks built by 35 mb over the same period.
Lastly, Brent crude futures rallied by $8/bbl in early October. The market remained on tenterhooks regarding Israel’s response to Iran’s missile attack, while the unwinding of ultra-bearish investor exchange positioning contributed to the price rebound. After slumping to multi-year lows in September due to concerns over an amply supplied market in 2025, Brent was trading at around $78/bbl at the time of writing.
(safety4sea.com, October 17, 2024)
