OPEC says 'exaggerated concerns' about demand are hitting oil prices but still sees a slowdown in 2024

• OPEC says oil demand concerns were exaggerated in November, according to its latest report.
• But the oil cartel still expects a marginal slowdown in demand growth next year.

Excessive worry over oil demand was a key theme in November, marked by high volatility and heavy sell-offs in futures prices, the Organization of the Petroleum Exporting Countries said in its monthly report.

That comes as Brent crude, the international benchmark, fell 7% in November and has tumbled over 20% from a September peak.

"Speculators played a major role in this trend, cutting their bullish positions sharply while increasing short positions. The market dynamic was fueled by exaggerated concerns about oil demand growth, which negatively impacted market sentiment," the report stated.

Through this year, analysts have voiced caution of "demand destruction" in oil markets, as high summer prices, depreciating currencies and rising borrowing costs hampered fuel consumption.

Still, OPEC kept its outlook for global oil demand growth unchanged, at 2.46 million barrels per day for 2023, though it does expect a slowdown to 2.25 million bpd next year.

This surpasses other forecasts, with the International Energy Agency predicting demand growth to plunge to 930,000 bpd in 2024. Meanwhile, Fitch Ratings suggested that slower economic growth next year could exacerbate a surplus in oil supply, potentially forcing OPEC+ to further lower output.

For its part, OPEC said strong economic growth will be the main driver of elevated oil demand. While raising its 2023 global forecast to 2.9%, it left next year's outlook steady at 2.6%.

"As 2023 draws to an end, the OPEC Secretariat remains cautiously optimistic about the fundamental factors affecting oil market dynamics in 2024," it said.

On the supply side, OPEC's expectations are also unchanged. It predicted non-OPEC supply growth of 1.8 million bpd in 2023, followed by 1.4 million bpd in 2024. Both years are expected to be led by US production.

Throughout 2023, OPEC members have cut back on their crude output in an effort to boost prices. However, strong US production has undermined this, while hints from Saudi Arabia and Russia to further curb supply next year have failed to lift crude.