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Global oil demand remains pretty solid and could surprise to the upside this year, tightening market balances and potentially leading to higher prices, Claudio Galimberti, head of global oil macro research at Rystad Energy, told Bloomberg in an interview this week.
So far into 2024, oil prices have remained stuck in a narrow trading range of around $75 to $80 per barrel Brent. That’s mostly because market players perceive global oil demand is currently weak.
However, demand continues to grow steadily, which would lead to a tight market this year and push oil prices higher, according to Galimberti.
Solid demand growth leads Rystad Energy to expect tight balances in the first and second quarter of 2024, and as a result – higher prices, Galimberti told Bloomberg.
“We can call the market a Saudi market in the past six-eight months, because they single-handedly generated a shortage on the market implementing their very significant cuts,” he added.
Rystad Energy’s analysts reckon that oil demand will shoot up this year “quite dramatically” and this would allow Saudi Arabia, and potentially OPEC, to gradually unwind their cuts.
At some point in the course of 2024, the oil market will be tight even without very deep cuts from the Saudis and OPEC, Galimberti said.
Oil prices have been stuck below $80 per barrel this year, despite the escalation of tensions in the Middle East, as traders continue to be concerned about the pace of oil demand growth in China and other major economies this year.
OPEC expects robust demand growth in 2024 and 2025, while the International Energy Agency (IEA) has significantly lower estimates of demand growth this year, even if it raised last week its demand growth forecast for a third consecutive month.
The IEA sees global oil demand growth at 1.2 million barrels per day (bpd) this year compared to 2023, while OPEC expects growth of around 2.2 million bpd.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.