EIA Forecasts Global Oil Market Deficit in 2024.
The U.S. Energy Information Administration (EIA) has revised its forecast for the global oil market, now projecting a supply deficit next year instead of the previously anticipated surplus. This shift comes after the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, decided last month to extend most of their significant oil output cuts into 2024.
Since late 2022, OPEC+ has been restricting output to support oil markets amidst weakening demand growth, high interest rates, and record U.S. output. With the market expected to enter a deficit, refiners will likely need to draw from oil inventories to meet the growing demand.
The EIA’s latest monthly short-term energy outlook indicates that the global oil demand will average approximately 104.7 million barrels per day (bpd) next year, while supply will be around 104.6 million bpd. This contrasts with their previous forecast, which estimated demand at around 104.5 million bpd and supply at 104.7 million bpd.
For the second half of 2024, the EIA predicts that world oil demand will outstrip output by around 750,000 bpd. This marks an increase from earlier forecasts that showed a deficit of about 550,000 bpd for the same period this year. Consequently, withdrawals from global inventories are expected to push oil prices higher, with global benchmark Brent crude prices projected to average $89 a barrel in the second half of this year, up from $84 a barrel in the first half.
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The EIA also suggested that the market might return to a surplus in the third quarter of next year if OPEC+ starts to unwind production cuts. The producer group has indicated that it will gradually reduce some voluntary cuts starting in October. “We anticipate that the market will gradually return to moderate inventory builds in 2025 after the expiration of voluntary OPEC+ supply cuts in Q4 2024 and after forecast supply growth from countries outside of OPEC+ begins to offset growth in global oil demand,” the EIA said.
In the United States, oil output is expected to grow by 320,000 bpd this year, reaching a record of 13.25 million bpd, slightly exceeding the previous forecast of 13.24 million bpd.
Overall, the EIA’s revised outlook highlights the ongoing volatility in the global oil market, driven by production cuts from OPEC+ and shifting dynamics in supply and demand.
