Morgan Stanley Revises Global Oil Demand Growth Forecast for 2024, Impacting Market Dynamics
Morgan Stanley, a leading financial institution, has adjusted its projection for global oil demand growth in 2024 from 1.2 million barrels per day to 1.1 million barrels per day. This revision is influenced by various factors such as slower economic growth in key markets, the rise of alternative energy sources, and evolving global economic conditions.
One significant factor contributing to this downward revision is China's slower-than-expected economic growth, which has led to a decline in oil consumption. The increased sale of LNG trucks in China has also contributed to a reduction in diesel demand, impacting China's oil demand growth by 100-150 kb/d in 2024.
Furthermore, the growing popularity of New Energy Vehicles (NEVs) in China, accounting for nearly half of all new car sales, is further diminishing gasoline demand. The transition towards alternatives to oil in certain industries, coupled with the proliferation of Electric Vehicles (EVs) and LNG adoption, is gradually reducing the reliance on oil, particularly in transportation and industrial applications.
On the supply side, non-OPEC supply growth has slowed down, leading to a tighter oil market in the short term. While Morgan Stanley anticipates a rebound in non-OPEC supply in the future, there are concerns about whether this growth will align with previous projections.
OPEC's production cuts have played a crucial role in maintaining market balance, but the anticipated softening of demand and increased supply in late 2024 could potentially result in a surplus in 2025. As the market looks towards the future, the balance between OPEC and non-OPEC supply will be pivotal in determining oil price dynamics.
In response to these market dynamics, Morgan Stanley has revised its price forecast, with Brent expected to average around $80 per barrel in Q4 2024. Prices are projected to gradually decline to approximately $75 per barrel by mid-2025, reflecting the expected easing of market conditions.
The recent dip in Brent prices to around $76 per barrel serves as a reflection of the market's forward-looking nature, as traders anticipate softer demand and increased supply. This shift in global oil demand and supply dynamics has far-reaching implications for investors, businesses, and consumers, underscoring the importance of staying informed and adapting to changing market conditions for financial success.