In the past two weeks, the momentum of the oil market has continued to lean towards a downward trend. Standard Chartered Bank's commodity experts report that demand concerns remain the biggest bearish catalyst for the oil market.

Standard Chartered Bank pointed out that on October 21st, International Energy Agency (IEA) Executive Director Birol stated that "global oil demand has been very weak this year, much weaker than in previous years," mistakenly implying that oil demand is lower than in previous years. However, Standard Chartered Bank stated that compared to the years after the pandemic, the growth of oil demand has slowed down, rather than absolute oil demand. In fact, Standard Chartered Bank stated that global oil demand has reached a series of new historical highs this year.

After the latest data from the Joint Organization Data Initiative (JODI) was released on October 17th, analysts calculated global demand and concluded that August demand reached a historic high of 103.79 million barrels per day, which is about 450000 barrels per day higher than the forecast before the release of JODI data. August became the third consecutive month to set a new historical high in demand, with Standard Chartered Bank calculating a demand growth of 1.32 million barrels per day for August.

Although this demand growth is

lower than all other August demand growth after the pandemic, it is difficult to be considered weak. Standard Chartered Bank reported that the largest demand growth in August came from South Korea (219000b/d), Italy (185000b/d), Saudi Arabia (117000b/d), Türkiye (99000b/d) and Spain (88000b/d). Due to the unexpected growth in August, Standard Chartered Bank has now raised its global demand growth forecast for 2024 to 1.45 million barrels per day.

Standard Chartered Bank pointed out that traders continue to overlook the fact that non OPEC supply has slowed more than demand so far in 2024. According to estimates from the International Energy Agency (IEA), non OPEC supply growth has slowed down oil production from 2.4 million barrels per day in 2023 to 930000 barrels per day in 2024, while demand growth has slowed down from 1.99 million barrels per day in 2023 to 860000 barrels per day in 2024. Therefore, the International Energy Agency estimates that the growth rate of non OPEC supply in 2024 will be 1.47 million barrels per day faster than supply reaching 1.47 million barrels per day, while the slowdown in demand will be relatively small, at 1.13 million barrels per day.

The supply side relative slowdown forecast proposed by other energy agencies is even greater than that of the International Energy Agency. For example, the US Energy Information Administration (EIA) estimates that non OPEC supply has decreased by 1.89 million barrels per day compared to a year ago, while demand has decreased by 1.19 million barrels per day. Standard Chartered Bank estimates that non OPEC supply will slow down by 1.83 million barrels per day in 2024, while demand growth will slow down by 600000 barrels per day.

On the supply side, Standard Chartered Bank has concluded that in the short term, the International Energy Agency's model means that global inventories will decrease by 370000 barrels per day in the third quarter of 2024. In addition, Standard Chartered Bank's model shows that even if voluntary production cuts are reduced, provided that Russia, Iraq, and Kazakhstan make up for past overproduction, the supply gap in the first half of 2025 will still be 200000 barrels per day. As early as July, three OPEC+member countries submitted compensation plans for excess crude oil production in the first six months of 2024 to the OPEC Secretariat. According to OPEC, by September 2025, the entire excess production will be fully compensated within the next 15 months, with Russia cumulatively "repaying" 480000 barrels per day, Iraq 118400 barrels per day, and Kazakhstan 620000 barrels per day.

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