Morgan Stanley analysts have revised their global oil demand growth forecast for 2024, citing a number of key factors. The bank has lowered its projection to 1.1 million barrels per day (mbpd) from a previous estimate of 1.2 mbpd. This adjustment stems from several developments:
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Slower Economic Growth in China:
China’s economic performance is a significant driver of global oil demand, and the bank has revised its growth projections for the region downward.*
Increased Electric Vehicle Adoption:
The adoption of electric vehicles continues to gain momentum, particularly in China, and this is displacing traditional gasoline-powered cars, thus impacting oil demand.*
Rise in LNG-Powered Trucks:
China’s move towards LNG-powered trucks is also contributing to a decline in oil demand. The bank estimates this shift has reduced oil demand growth by 100-150 thousand barrels per day.In addition to the revised demand forecast, Morgan Stanley has also adjusted its Brent price prediction. The bank now expects Brent crude to average $80 per barrel in the fourth quarter of 2024, down from a previous estimate of $85 per barrel.
The oil market currently exhibits tightness, with inventories having decreased by 1.2 million barrels per day over the past four weeks. Morgan Stanley analysts expect this trend to persist through the third quarter of 2024.
It’s worth noting that the Organization of the Petroleum Exporting Countries (OPEC) has also recently revised its global oil demand growth estimates. OPEC now projects demand growth of 1.78 million barrels per day (mb/d) for 2024, down from a previous projection of 1.85 mb/d. For 2025, OPEC has lowered its estimate to 2.11 mb/d from 2.25 mb/d. These adjustments reflect changes in data received for the first and second quarters of 2024, as well as lowered expectations for China’s oil demand growth.
These developments highlight the ongoing shifts within the global energy landscape and the increasing influence of factors like electric vehicles and alternative energy sources on oil demand. The outlook for oil prices and demand remains fluid, with continued volatility expected in the coming months.
