Morgan Stanley cuts ’24 oil demand growth forecast to 1.1m bpd

Morgan Stanley has reduced its global oil demand growth forecast for 2024 from 1.2 million barrels per day (bpd) to 1.1 bpd, citing slower economic growth in China, increased use of electric vehicles, and a rise in liquefied natural gas (LNG)-powered trucks.

The bank has also slightly lowered its Brent crude price forecast, expecting an average of $80 per barrel in the fourth quarter, down from $85 per barrel. As of Friday, Brent crude traded at approximately $78 per barrel, while US West Texas Intermediate (WTI) crude futures were at $74.52.

The shift to LNG trucks has reduced China’s oil demand growth by 100-150 thousand barrels per day (kbd), with electric vehicles (EV) contributing a further 100 kbd reduction. Additionally, slower growth in petrochemical capacity expansion has impacted demand for LPG, ethane, and naphtha due to low margins.

Morgan Stanley’s revision aligns with a recent Organisation of the Petroleum Exporting Countries (OPEC) forecast cut, which also cited weak demand from China.

Despite this, the oil market remains tight, with inventories decreasing by about 1.2 million bpd over the past four weeks, a trend expected to persist through the third quarter.

Attribution: Reuters

Subediting: M. S. Salama