At the end of last week, the International Energy Agency's April report on the current state of the global oil market was published.
Here's a look at the key findings in this monthly update:
"Global oil demand continues to lose momentum, with the first quarter of 2024 growth of 1.6 million barrels per day (mb/d), 120 000 barrels per day (bp/d) below the previous forecast due to exceptionally weak OECD deliveries. With the post-Covid 19 recovery now largely complete and vehicle efficiency and the expanding electric vehicle fleet continuing to drag on oil demand, growth slows to 1.2 mb/d and 1.1 mb/d in 2024 and 2025, respectively.
Non-OPEC+ countries, led by the U.S., will drive global supply growth through 2025. Global production is forecast to increase by 770 000 bpd to 102.9 million bpd in 2024. Non-OPEC+ production will increase by 1.6 million bpd, while OPEC+ supply may fall by 820 000 bpd if voluntary cuts remain in place. In 2025, global economic growth could rise to 1.6 million b/d.
Non-OPEC+ countries are forecast to lead gains with an increase of 1.4 million bpd, while OPEC+ output could increase by 220 000 bpd if restrictions remain in place.
Global refinery throughput is forecast to grow by 1 million bpd to 83.3 million bpd in 2024, down 160 000 bpd from last month's report, due to lower Russian supplies, unplanned outages in Europe and still moderate Chinese activity.
Capacity is projected to increase by 830 000 bpd to 84.2 million bpd by 2025, as a 1.1 million bpd increase in non-OECD countries more than offsets declines in OECD countries.
Observed global oil inventories rose by 43.3 million barrels of oil in February, reaching a seven-month-high.
However, global oil demand growth has been revised down by around 100 000 bpd since last month's report, to 1.2 million bpd, following exceptionally weak supplies in the OECD at the start of the year. The newly released forecast for 2025 in this month's report shows the growth rate will slow further, to 1.1 million bpd next year, as the post-Covid 19 recovery exhausts itself. Non-OECD countries dominate the outlook, with forecast demand rising by 1.3 million bpd in 2024 and 1.2 million bpd in 2025. By contrast, OECD consumption will decline by 60 000 bpd in both years. China continues to lead economic growth, even as its share of global growth falls from 79% in 2023 to 45% in 2024 and 27% the following year.
Sustained production curbs by the OPEC+ alliance mean that non-OPEC+ producers, led by America, will continue to drive global oil supply growth through 2025. OPEC+ market share has already fallen to a record low after the alliance cut production by almost 2 million barrels a year, while non-OPEC+ production rose by almost the same amount. This trend looks set to continue into 2024, when non-OPEC+ countries will boost production by a further 1.6 million bpd. OPEC+ supplies are projected to decline by 820 000 bpd, assuming the cuts are maintained in the second half of the year. In 2025, global oil supplies are forecast to increase by 1.6 million bpd to a new record of 104.5 million bpd.
The additional volumes from the U.S., Brazil, Guyana and Canada alone could come close to meeting the growth in global oil demand for this year and next. These four countries are set to hit record high production levels again, adding a combined 1.2 million barrels per day in 2024 and 1 million barrels per day in 2025. While the United States is slowing down, it is still considered the world's largest source of supply growth.
Sustained non-OPEC+ production, combined with a projected slowdown in demand growth, will reduce OPEC+ oil demand by about 300 000 bpd in 2025, to an average of 41.5 million bpd."
Thus, if one trusts the conclusions of this forecast, one may build a trading plan based on a bearish scenario for Brent oil prices.
From a technical point of view, a series of bearish divergences are recorded on the daily chart of Brent oil, which additionally indicates that oil is overbought.
The final recommendation is to sell Brent oil.
Profits should be taken at the level of 84.0. A Stop-Loss could be set at the level of 95.0.
The possible loss should not exceed 2% of your deposit funds.
This content is for informational purposes only and is not intended to be investing advice.
