Global crude demand slows in Q2, China consumption contracts – IEA

LONDON (ICIS)–Global crude oil demand slumped to 710,000 bbl/day in Q2 2024 as China’s post-pandemic economic rebound ran its course, the International Energy Agency (IEA) said on Thursday.

Representing the slowest quarterly increase since the closing months of 2022, the period saw Chinese demand decline in April and May, the agency said in its July monthly oil market report.

Global oil demand gains are expected to hover below one million barrels/day in 2024 and 2025 as tepid consumption growth, vehicle electrification and energy efficiency measures weigh on purchasing.

Total supply increased by 150,000 barrels/day to 102.9 million barrels in June as easing maintenance levels and increasing biofuels output offset a fall in Saudi production, the IEA added.

Saudi Arabia output fell to 8.85 million barrels in June from 9.03 million barrels the previous month, according to IEA data, leaving the Kingdom’s total excess capacity at 3.26 million barrels/day.

Despite weak demand growth, pricing firmed slightly in June, with Brent crude futures priced around $86/barrel at the end of the month, and remaining around the $85/barrel mark in trading this week.

This increase was driven in part by OPEC+ coalition signals that the schedule for unwinding production cuts would depend on market conditions, easing fears of a sudden surge in supply.

Petrochemical sector demand for oil was sluggish during the quarter, the IEA added, but other signs point to potential early improvements for manufacturing in Europe.

“Demand for industrial fuels and petrochemical feedstocks was particularly weak. By contrast, Q2 delivery data of gasoil and naphtha for OECD economies came in higher than expected, potentially signalling a budding recovery in Europe’s ailing manufacturing sector,” the IEA said.

Despite the industrial input uptick, overall demand continues to trend slower, the agency added.

“For next year, the call on OPEC+ crude tumbles… as demand growth continues to slow and non-OPEC+ output continues to expand. After the hot summer, cooler trends are set to prevail.”

Thumbnail photo: An oil rig off the coast of China’s Hebei province. Source: Xinhua/Shutterstock