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OPEC has revised its 2024 global oil demand growth forecast downward, reducing it from 2.25 million barrels per day (bpd) to 2.11 million bpd. This adjustment is attributed to weaker-than-expected data in the first half of the year and a slowdown in China's oil demand growth. Despite the reduction, OPEC's forecast remains at the higher end of industry expectations. Oil prices stayed steady above $80 per barrel after the report, reflecting market stability. OPEC+ has extended its output cuts until September 2024 to support prices. In contrast, the International Energy Agency (IEA) projects much lower demand growth of 970,000 bpd for 2024, highlighting uncertainties about China's economic recovery and the global transition to cleaner fuels. The revised forecast underscores a cautious outlook for the year ahead.

Key Highlights

* OPEC reduces its 2024 oil demand growth forecast from 2.25 million bpd to 2.11 million bpd.

* The revision reflects weaker-than-expected data for the first half of 2024 and softer expectations for China.

* OPEC's demand growth estimate still remains at the higher end of industry predictions.

* Oil prices remained steady above $80 a barrel following the report's release.

* The International Energy Agency projects a significantly lower demand growth of 970,000 bpd for 2024.

The Organization of the Petroleum Exporting Countries (OPEC) has revised its forecast for global oil demand growth in 2024, reducing it from 2.25 million barrels per day (bpd) to 2.11 million bpd. This adjustment reflects weaker-than-expected data from the first half of the year and a downward revision in China's expected oil demand growth. Despite this, OPEC's projections remain at the higher end of industry estimates.

Oil prices remained stable above $80 a barrel after the report was released, demonstrating the market's resilience amid mixed signals regarding future demand. The steady price performance comes despite the slowdown in demand growth and the ongoing transition to cleaner fuels, which has created a wider-than-usual split among forecasters.

OPEC+, which includes OPEC and allies like Russia, has been implementing a series of output cuts since late 2022 to support the market. On June 2, the group agreed to extend its latest production cut of 2.2 million bpd until the end of September 2024, with a gradual phase-out beginning in October. These efforts are aimed at balancing the market and maintaining price stability.

In contrast, the International Energy Agency (IEA), representing industrialized nations, projects a much lower demand growth of just 970,000 bpd in 2024. The discrepancy between OPEC's and the IEA's forecasts highlights ongoing uncertainties, particularly around China's economic recovery and the global shift towards cleaner energy sources.

Conclusion

OPEC's revised 2024 forecast reflects a cautious outlook, with oil demand growth expectations tapering amid economic uncertainties and a slow recovery in China.

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