The International Energy Agency (IEA) released its monthly report on September 12th local time, stating that global oil demand is expected to increase by 0.8 million barrels per day in the first half of 2024, reaching the lowest level since the pandemic. Demand growth in the first half of the year has slowed significantly compared to the same period last year, and even with the extension of OPEC+ production cuts, the oil market is expected to face oversupply in 2025.

HSBC said that regardless of what supply measures OPEC+ takes, it could potentially harm oil prices.

If OPEC+ cancels its production cuts, it could lead to a significant oversupply in 2025. On the other hand, although maintaining the cuts may initially help boost prices, it could also be seen as an implicit acknowledgment of weak global demand growth.

Demand is expected to be even weaker next year.

The latest monthly oil market report from the IEA shows that oil demand growth has dropped to its lowest level since the pandemic.

In terms of supply, global oil supply increased by 0.08 million barrels per day to 0.1035 billion barrels per day in August. Global oil supply is expected to increase by 0.66 million barrels per day in 2024 and by 2.1 million barrels per day in 2025.

The current balance indicates that if OPEC+ continues to cancel production cuts, the global oil market will be oversupplied in 2025.

At the same time, IEA maintains its forecast for the total supply of oil in 2024 at an average of 0.1029 billion barrels per day, and slightly raises its forecast for the total supply of oil in 2025 from 0.1049 billion barrels per day to 0.105 billion barrels per day.

The oil production of non-OPEC+ countries is also expected to increase by 1.5 million barrels per day this year and next year, surpassing the global oil demand growth rate by more than 50%. This increase is mainly driven by the United States, Brazil, Canada, and Guyana.

In terms of demand, IEA has lowered its forecast for global oil demand growth in 2024 from 0.97 million barrels per day to 0.903 million barrels per day, and maintains its forecast for global oil demand growth in 2025 at 0.954 million barrels per day, achieving "moderate" growth. The current trend further reinforces its expectation that global oil demand will peak at the end of this decade.

IEA believes that global oil demand growth is "sharply slowing down," pushing oil prices to their lowest level in three years. Global oil consumption in the first half of this year increased by 0.8 million barrels per day, only one-third of the growth rate during the same period in 2023. This is the lowest level since the collapse of oil demand during the pandemic in 2020.

The outlook for next year is even weaker, with a surplus expected in each quarter, even if OPEC+ led by Saudi Arabia and Russia abandons its gradual plan to restore interrupted supplies. Fatih Birol, the head of the International Energy Agency, said that the agency had previously predicted that global oil demand would stop growing before 2020, and the current slowdown confirms the agency's expectation that "peak demand may be approaching."

Oil prices continue to fluctuate.

On September 10th, international oil prices fell sharply, with Brent crude oil futures falling below $70 per barrel for the first time since December 2021.

On the 12th, the production of oil and gas in the Gulf of Mexico was disrupted by the passage of Hurricane "Nicholas", causing nearly half of the oil and gas facilities along the Gulf Coast of the United States to shut down, boosting international oil prices. UBS Group analysts estimate that these disruptions will reduce production in the Gulf of Mexico by about 0.05 million barrels per day this month.

However, some analysts have warned that the impact of Hurricane Ida may be short-lived as it quickly weakened after making landfall in Louisiana on Wednesday evening.

StoneX analyst Alex Hodes pointed out that this may shift the focus of the oil market back to global demand insufficiency. Oil and fuel export ports from southern to central Texas have reopened on Thursday, and refineries are ramping up production.

Looking ahead to the future trend of oil prices, the market does not have high expectations.

On September 9, Morgan Stanley once again lowered its price forecast for Brent crude oil. The report indicates that the global benchmark oil price in the fourth quarter will average $75 per barrel, down from the previous forecast of $80.

Citigroup states that despite the possibility of a technical rebound in oil prices, if OPEC+ does not commit to indefinitely extending current production cuts, the market may lose confidence in OPEC+ defending the $70 per barrel oil price level, and the average oil price may fall to $60 per barrel by 2025.

If Brent crude oil prices fall to $60 per barrel, fund flows may further pressure, and prices may need to drop to $50 per barrel before rebounding.