Morgan Stanley (MS.N) has lowered its 2024 global oil demand growth forecast, primarily as a result of China’s slower economic growth, increased use of electric vehicles, and an increase in the number of liquefied natural gas (LNG)-powered trucks in China. The bank cut its worldwide oil request development estimate during the current year to 1.1 million barrels each day (mbpd) from 1.2 mbpd.
It also modestly lowered its Brent price forecasts, predicting prices of $80 per barrel in the fourth quarter of 2024, down from $85 in the previous quarter. Brent rough was exchanging around $78 a barrel by 1221 GMT on Friday, and U.S. West Texas Middle unrefined fates were at $74.52.
The shift to LNG trucks has cut China’s oil request development by 100-150 thousand barrels each day (kbd), while fuel dislodging by EVs has diminished it by around 100 kbd, Morgan Stanley experts said in a note dated Aug. 22. Furthermore, development in petrochemical limit extension – which supports LPG, ethane, and naphtha utilization – has eased back because of low petrochemical edges, the note said.
The note is in line with the Organization of the Petroleum Exporting Countries (OPEC)’s cut last week in its oil demand growth forecast for this year and 2025, which also cited China’s softness.
According to Morgan Stanley, the oil market is currently in a tight state because inventories have decreased by approximately 1.2 million barrels per day over the past four weeks.
This trend is expected to continue throughout the remainder of the third quarter. “In any case, with request set to slow after summer, and both OPEC and non-OPEC supply to increment from the final quarter, we predict a conditioning balance, going to surplus in 2025,” it added.
According to the bank, Brent prices have fallen faster than the fundamentals of the market in the short term. It also stated that it anticipates Brent to be anchored around $75 per barrel by this time next year.
