BAKU, Azerbaijan, September 7. In consideration of prevailing economic dynamics, it is becoming increasingly likely that, setting aside seasonal fluctuations, physical oil demand may witness a reduction in the upcoming quarters, Trend reports.
This trend aligns with the deceleration observed in the global economy.
BMI, a unit of Fitch Solutions, lists some factors influencing economic outlook:
Revised GDP Growth Expectations: Although consensus expectations for real GDP growth in 2023 have seen an upward trajectory throughout the year, the outlook for the following year has dimmed. Much of this adjustment is linked to the United States, where the time lag between the implementation of tightening monetary policies and the resulting economic slowdown has led economists to postpone their projections of an impending recession until mid-2024.
Challenges in Mainland China: Despite significant governmental efforts to bolster the economy, the recovery in Mainland China appears poised to remain uneven and fraught with challenges.
Resilient Global Economic Outlook: It is important to note that, notwithstanding these uncertainties, current forecasts indicate that global real GDP growth is expected to reach 2.2% year-on-year in 2024. This figure, while slightly lower than the 2.4% projected for the present year, suggests a degree of resilience in the global economy.
Anticipated Economic Recovery: The economic downturn is anticipated to reach its nadir next year, with growth rebounding to a robust 3.2% in 2025. This positive trend is expected to dispel many prevailing macroeconomic uncertainties, including concerns related to peak inflation points, terminal interest rate levels, the potential for US and eurozone recessions, and the timing and depth of the global economic deceleration.
Divergence in Oil Demand and Brent Crude Prices: It is worth highlighting that trends in physical oil demand and Brent crude oil prices can exhibit disparities, as demonstrated in the accompanying chart. This leads us to believe that the macroeconomic backdrop may become less challenging for sentiment in the oil market in the coming year, potentially facilitating some, albeit limited, year-on-year price gains.
These evolving economic dynamics are expected to play a pivotal role in shaping the future of the oil market, as they provide crucial context for assessing the trajectory of oil consumption and market sentiment.
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