World oil demand next year to rise faster than expected, IEA says

London: World oil demand will rise faster than expected next year, the International Energy Agency (IEA) said on Thursday, a sign that the outlook for near-term oil use remains robust.

World consumption will rise by 1.1 million barrels per day (bpd) in 2024, the Paris-based IEA said in a monthly report, up 130,000 bpd from its previous forecast, citing an improvement in the outlook for the United States and lower oil prices.

Despite the upgrade, there is still a sizeable gap between the IEA, which represents industrialised countries, and producer group OPEC over 2024 demand prospects. OPEC in a monthly report on Wednesday kept its forecast for world oil demand growth in 2023 at 2.46 million bpd. In 2024, OPEC sees demand growth of 2.25 million bpd, also unchanged from last month.

Demand slowdown

The 2024 revision reflects "a somewhat improved GDP outlook compared with last month's report," the IEA said. "This applies especially to the U.S. where a soft landing is coming into view."

"Falling oil prices act as an additional boost to oil consumption," it said. Oil has weakened to a six-month low near $72 a barrel this week, even after OPEC+, which includes OPEC oil-exporting nations and allies such as Russia, on Nov. 30 announced a new round of production cuts for the first quarter of 2024.

Crude was up almost 2 per cent on Thursday after the IEA report was released to trade near $76.

In the report, the IEA also trimmed its forecast for oil demand growth in 2023 by 90,000 bpd to 2.3 million bpd and lowered its fourth-quarter estimate by almost 400,000 bpd.

A halving in the rate of demand expansion next year is due to below-trend economic growth in major economies, efficiency improvements and a booming electric vehicle fleet, the IEA said.