The International Energy Agency trimmed its forecasts Thursday because it stated world oil demand growth continues to gradual and consumption in China dipped.
The Paris-based physique that advises industrial nations on power coverage stated oil demand elevated by simply 710,000 barrels per day within the second quarter, the slowest price in over a yr.
“Oil consumption in China, long the engine of global oil demand growth, contracted in both April and May” the IEA stated in its month-to-month report on the oil market.
Chinese demand within the second quarter was additionally marginally under the identical interval in 2023.
While demand in that quarter benefitted from the reopening of the Chinese economic system after Covid lockdowns, the IEA stated that the latest drop additionally “points to an intrinsic slowdown” and that “the downswing in the industrial fuels indicates a broader weakness in manufacturing”.
The world’s second-largest economic system is grappling with an actual property debt disaster, weakening consumption, an ageing inhabitants and geopolitical tensions abroad.
The IEA trimmed its forecast for Chinese oil demand this yr by 0.2 million barrels per day (mbd) to 17 mbd. While that will be a achieve of 0.5 mbd from 2023, it’s far in need of the 1.5 mbd achieve final yr.
The IEA sees Chinese demand growth slowing to 0.3 mbd in 2025, additionally a drop of 0.2 mbd from its earlier forecast.
The return to pre-Covid normalcy and weak growth may also see China’s weight in world oil demand growth decline, from about 70 % of positive factors final yr to 40 % this yr and subsequent, in response to the IEA.
Emerging economies akin to India and Brazil will account for a larger share in world oil demand growth, whereas superior economies within the OECD will see consumption decline.
“Global gains are forecast to average just below 1 mbd in 2024 and 2025, as subpar economic growth, greater efficiencies and vehicle electrification act as headwinds,” the company stated.
It trimmed its 2024 world oil demand forecast by 0.1 mbd to 103.1 mbd and its 2025 forecast by 0.2 mbd to 104.0 mbd.
Earlier this month the IEA stated it anticipated world oil demand to stabilise at round 106 mbd by the top of the last decade as demand in superior economies falls.
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