In a recent update, the Organization of the Petroleum Exporting Countries (OPEC) has opted to maintain its forecast for demand growth in 2024 and 2025, while also revising upward its global economic growth projections. Despite ongoing tensions in the Middle East, the oil producer bloc appears optimistic about the future of the market.
According to OPEC’s monthly report, world oil demand is expected to increase by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025, figures that remain unchanged from the previous month. The organization attributes this stability to the continuation of robust global economic growth seen towards the end of 2023, which is anticipated to persist into the first half of 2024.
With a revised economic growth forecast of 2.8 per cent for 2024, OPEC sees potential for further expansion, driven by expectations of easing general inflation throughout the year. This figure, up by 0.1 percentage points from the previous projection, demonstrates OPEC’s confidence in the market’s resilience. Looking ahead to 2025, the organization maintains its forecast at 2.9 per cent growth.
Last week, OPEC made headlines by extending voluntary oil output cuts of 2.2 million bpd into the second quarter or mid-2024. This decision underscores the commitment of major oil-producing nations, with Saudi Arabia leading the way by maintaining its supply cut of one million bpd through the end of June.
Despite these developments, international crude oil prices experienced minimal fluctuations, with Brent futures for May delivery holding steady at $82.45 per barrel. Meanwhile, the April US West Texas Intermediate (WTI) crude contract saw a slight increase, reaching $78.24 per barrel.
On the domestic front, crude oil futures exhibited volatility but ultimately traded higher on the multi-commodity exchange (MCX), closing at ₹6,488 per barrel. Analysts attribute this rebound to a weakening dollar index and anticipation surrounding the monthly demand reports from OPEC+ and the International Energy Agency (IEA).
While OPEC+ remains bullish about future demand, the IEA has expressed concerns regarding global oil demand, citing a slowdown in China. Despite these differing outlooks, crude oil prices are finding support from the weakening dollar index and expectations of interest rate cuts.
Looking ahead, market analysts anticipate continued volatility in crude oil prices, with support levels at $76.90-$76.30 and resistance at $78.30-$78.90. In terms of the INR, crude oil is expected to find support at ₹6,360-₹6,290, with resistance levels at ₹6,510-₹6,580.
