Despite some economic activities’ weakness in few key economies in 1Q24, (i.e. US and Japan), the steady global economic growth has continued in 1H24. Growth in non-OECD economies has held up quite well, and even better-than-expected in the BRIC economies. Should growth in major OECD economies accelerate in 2H24, with non-OECD economies maintaining the momentum of 1H24, then economic growth for the year could potentially improve further. At present, the global economic growth forecast stands at 2.8% for 2024 and 2.9% for 2025, unchanged from last month’s assessment.
An expected shift towards more accommodative monetary policies from major central banks in 2H24, notably the US, the Eurozone and the UK, will depend on growth dynamics and inflationary developments in the various economies. From a sectorial perspective, improvements in the industrial sector have been noticeable in non-OECD economies, while industrial production in OECD economies is forecast to only gradually pick-up in 2H24 from the weak levels experienced since the beginning of the year. Globally, the services sector maintains a stable momentum.
It is projected to be the main contributor to the economic growth dynamic in 2H24, particularly supported by travel and tourism, with a consequent positive impact on oil demand. With this, global oil demand is forecast to grow by an average of 2.3 mb/d, y-o-y, in 2H24. For the year 2024, it is forecast to expand by 2.2 mb/d.
In the OECD, oil demand is estimated to increase by 0.25 mb/d, y-o-y, in 2H24. This is driven mostly by the US. OECD Europe and OECD Asia Pacific are expected to expand only slightly. In terms of products, jet kerosene and gasoline are anticipated to be the main regional oil demand drivers, on the back of the summer driving season and continued healthy air travel activity. Diesel requirements, however, are anticipated to be subdued by softer economic and manufacturing activity. Moreover, demand for naphtha may be pressured by declining petrochemical margins.
In the non-OECD, China is expected to be the primary oil demand driver, with other countries in the region providing support. The ongoing air travel recovery, healthy driving levels, as well as improvements in manufacturing sector activities are projected to support jet/kerosene, gasoline, and distillate demand in the region. Non-OECD oil demand is forecast to grow on average by 2.1 mb/d, y-o-y, in 2H24. In terms of the main products, gasoline and jet fuel are set to lead regional oil demand growth, followed by diesel, LPG and naphtha.
Overall, non-OECD oil demand is projected to average 2.1 mb/d in 2024. Following y-o-y estimated growth of 1.8 mb/d in 1H24, non-DoC liquids supply is forecast to expand by 0.7 mb/d, y-o-y, in 2H24. For the entire year, non-DoC liquids supply in 2024 is anticipated to grow by 1.2 mb/d, y-o-y. On a regional basis, OECD liquids supply (excluding Mexico) is set to rise by 0.4 mb/d in 2H24, y-o-y, driven by the US, Canada and Norway. At the same time, liquids supply from the non-OECD region (excluding DoC participating countries) is forecast to rise by 0.2 mb/d in 2H24, y-o-y. Latin America is forecast to be the main driver of production growth in the non-OECD, with an expansion of 0.3 mb/d in 2H24, y-o-y, while supply output in Other Asia is expected to decline.
Source: OPEC