The International Energy Agency (IEA) revised its oil demand forecast for 2024 upwards, citing an improving economic outlook in the United States and lower oil prices. The world oil consumption will rise by 1.1 million barrels per day (bpd) in 2024, the IEA said in its monthly report, up 130,000 bpd from its previous forecast, citing an improvement in the outlook for US and lower oil prices. This optimism about future demand further bolsters oil prices.
Oil prices rose on Thursday, December 14. A weaker U.S. dollar makes oil cheaper for non-U.S. buyers, increasing demand and driving up prices. Brent futures were up $2.64, or 3.6%, to $76.90 a barrel at 11:30 a.m. EST (1630 GMT). U.S. West Texas Intermediate (WTI) crude climbed $2.53, or 3.6%, to $72.00.
Oil has weakened to a six-month low near $72 a barrel this week, even after OPEC+, which includes OPEC oil-exporting nations and allies such as Russia, on Nov. 30 announced a new round of production cuts for the first quarter of 2024.
Crude was up more than 3% on Thursday after the IEA report was released to trade near $77.
The IEA and COP28 Presidency jointly emphasized the need for significant reductions in emissions from fossil fuels throughout this decade to keep the 1.5°C Paris Agreement goal within reach.
The bigger picture:
The rise in projected oil consumption for 2024 does not negate the long-term goal of reducing fossil fuel dependence. It reflects a complex global energy landscape where factors like economic fluctuations and short-term price changes can temporarily influence demand.
COP28 aimed to push for aggressive emissions cuts, not an immediate end to oil consumption. The focus is on gradually decoupling economic growth from fossil fuel dependence through renewable energy investments and efficiency improvements.