Global Oil Market Outlook

Global oil markets are projected to face a substantial surplus next year due to waning Chinese demand, according to the International Energy Agency (IEA).

> “Our current balances suggest that even if the OPEC+ cuts remain in place, global supply exceeds demand by more than one million barrels (mb/d) a day,” the IEA stated in its monthly report released on Thursday.

China's significant slowdown has been the primary drag on demand, with growth this year expected to average just one-tenth of the 1.4 mb/d increase in 2023.

Notably, demand from the world's largest oil importer contracted for the sixth consecutive month in September, making the 3Q24 average 270 kb/d below a year ago. In contrast, oil demand growth in advanced economies turned positive, expanding by 230 kb/d year-on-year in 3Q24.

The anticipated surplus would have been larger if not for OPEC+ deciding to postpone a scheduled output increase at its November meeting. The group, which had aimed to gradually increase output starting with a modest 180 kb/d in December, will now commence unwinding the extra voluntary cuts from January at the earliest.

OPEC+ will hold its bi-annual ministerial meeting on Dec. 1 to review market conditions and production strategies for 2025.

Moreover, global oil supply is rising significantly. Following the early November U.S. elections, the IEA expects the United States to lead non-OPEC+ supply growth of 1.5 mb/d in both 2024 and 2025, along with increased output from Canada, Guyana, Argentina, and significant contributions expected from Brazil.

> “Total growth from the five American producers will more than cover expected demand growth in 2024 and 2025,” the IEA added.

Global oil prices have eased from early October highs as market attention shifts from supply risks to concerns over the global economy's health, sluggish demand, and ample supply. At 08:45 ET (13:45 GMT), Brent oil futures rose 1% to $73.03 a barrel, while West Texas Intermediate crude futures increased by 1.1% to $69.19 a barrel.