BAKU, Azerbaijan, March 4. The latest analysis from the Oxford Institute of Energy Studies suggests that the oil market is on the brink of equilibrium, with a modest deficit of 30 thousand barrels per day (kb/d) projected for 2024, before transitioning into a surplus of 370 kb/d in 2025, Trend reports.
The forecast hinges on several factors, including the assumption that there will be no extension of the additional OPEC+ voluntary cuts beyond the first quarter of 2024. Additionally, the gradual return of withheld OPEC+ production in the second quarter of 2024 is expected to play a pivotal role in market dynamics. Consequently, the market is anticipated to flip into a surplus in the second and third quarters of 2024, following an 840 kb/d deficit in the first quarter, before tightening again towards the end of the year.
However, the projected surpluses in 2024 are contingent upon OPEC+ refraining from extending its additional voluntary cuts. An extension in the second quarter alone could potentially push the oil market into a deficit of 460 kb/d for the year. Similarly, OPEC+ output policy beyond December 2024 will significantly influence market balances in 2025, with surpluses anticipated in all quarters, averaging 370 kb/d for the year as a whole.
Preliminary data for total OECD commercial stocks at the end of 2023 reveal that OECD stocks are 80 million barrels below the 5-year average, remaining close to the levels observed at the end of 2022. Forecasting a balanced market in 2024, the Oxford Institute expects OECD stocks to fluctuate between 50-100 million barrels below the 5-year average throughout the year. However, by 2025, these stocks are anticipated to progressively build close to the average and slightly exceed it by year-end, by approximately 10 million barrels.
These projections underscore the delicate balancing act underway in the oil market, with near-term dynamics shaped by OPEC+ decisions and longer-term trends influencing stockpile levels and market stability.
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