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Trends & Projections From IEA's Monthly Oil Market Report
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The International Energy Agency (‘IEA’) has released its latest ‘Oil Market Report,’ providing crucial insights into global oil consumption, supply dynamics and market trends. This report comes closely on the heels of OPEC's own projections, highlighting interesting contrasts and comparisons.
Demand, Supply Projections and Trends
The IEA has trimmed its global oil demand growth estimate for 2025 by 50,000 barrels per day (b/d) to 980,000 b/d, citing the normalization of post-pandemic demand trends. This adjustment reflects a return to pre-pandemic growth rates, with China's previously dominant consumption showing significant signs of contraction. For 2024, the IEA's demand growth estimate remains virtually unchanged at 970,000 b/d, although the second quarter's growth was the slowest since Q4 2022 at just 710,000 b/d.
China's oil consumption declined year on year in Q2 2024, contrasting sharply with the substantial gains seen in 2023 and the first quarter of 2024. This decline underscores the waning of China's post-pandemic rebound, with weaker demand for industrial fuels and petrochemical feedstocks playing a critical role.
On the supply side, the IEA has raised its estimate for non-OPEC+ oil production growth in 2024 from 1.4 million b/d to 1.5 million b/d, buoyed by an upward revision in U.S. production growth to 740,000 b/d.
Comparing IEA and OPEC Projections
OPEC's latest monthly report, published just a day before the IEA's, presents a more optimistic outlook. OPEC projects a global oil demand growth of 2.25 million b/d in 2024 and 1.85 million b/d in 2025. What is noticeasble is that for both years, OPEC's demand growth figures are significantly higher than those of the IEA.
OPEC's optimism is supported by stronger-than-expected economic performance in key economies such as Brazil, Russia, India and China, coupled with a recovery in the eurozone. Additionally, OPEC maintains a stable outlook for non-OPEC+ supply growth, primarily driven by the United States, Canada and Brazil.
Market Dynamics & the Road Ahead
Oil prices have risen since June, with WTI crude up around 8% to over $83 per barrel now. This rally is partly due to seasonal upticks in northern hemisphere demand and constrained supply. The IEA highlights that the recent price increases are also supported by declining crude stocks and geopolitical risks.
As we move forward, the oil market is poised between supply constraints and evolving demand dynamics. The IEA's forecast for lower growth in China's oil consumption and the continued rise in non-OPEC+ production will likely keep the market in a state of flux. However, with geopolitical risks and potential changes in monetary policy from the Federal Reserve, there are positive indicators for sustained demand and price stability.
3 Stocks to Buy
Considering this relatively bullish picture, we recommend Oil/Energy investors to accumulate stocks like SM Energy Company (SM - Free Report) , Sunoco LP (SUN - Free Report) and Tullow Oil (TUWOY - Free Report) . Sunoco currently sports a Zacks Rank #1 (Strong Buy), while SM Energy and Tullow carry a Zacks Rank #2 (Buy) each.
You can see the complete list of today’s Zacks #1 Rank stocks here.
SM Energy Company: SM beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters. The independent oil and gas exploration and production company has a trailing four-quarter earnings surprise of 13.8% on average.
SM is valued at around $5.1 billion. SM Energy has seen its shares increase 24.4% in a year.
Sunoco LP: The Zacks Consensus Estimate for 2024 earnings of Sunoco indicates 99.7% growth.
The leading energy infrastructure and fuel distributors is valued at around $5.7 billion. Sunoco has seen its stock rise 29.2% in a year.
Tullow Oil: TUWOY is valued at some $561.4 million. Over the past 60 days, the Zacks Consensus Estimate for 2024 earnings has increased 20%.
Tullow Oil enjoys a Value and Growth Score of A and B, respectively, each helping it round out with a VGM Score of A. The Africa-focused hydrocarbon producer and explorer shares have gained 5.6% in a year.
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Trends & Projections From IEA's Monthly Oil Market Report
The International Energy Agency (‘IEA’) has released its latest ‘Oil Market Report,’ providing crucial insights into global oil consumption, supply dynamics and market trends. This report comes closely on the heels of OPEC's own projections, highlighting interesting contrasts and comparisons.
Demand, Supply Projections and Trends
The IEA has trimmed its global oil demand growth estimate for 2025 by 50,000 barrels per day (b/d) to 980,000 b/d, citing the normalization of post-pandemic demand trends. This adjustment reflects a return to pre-pandemic growth rates, with China's previously dominant consumption showing significant signs of contraction. For 2024, the IEA's demand growth estimate remains virtually unchanged at 970,000 b/d, although the second quarter's growth was the slowest since Q4 2022 at just 710,000 b/d.
China's oil consumption declined year on year in Q2 2024, contrasting sharply with the substantial gains seen in 2023 and the first quarter of 2024. This decline underscores the waning of China's post-pandemic rebound, with weaker demand for industrial fuels and petrochemical feedstocks playing a critical role.
On the supply side, the IEA has raised its estimate for non-OPEC+ oil production growth in 2024 from 1.4 million b/d to 1.5 million b/d, buoyed by an upward revision in U.S. production growth to 740,000 b/d.
Comparing IEA and OPEC Projections
OPEC's latest monthly report, published just a day before the IEA's, presents a more optimistic outlook. OPEC projects a global oil demand growth of 2.25 million b/d in 2024 and 1.85 million b/d in 2025. What is noticeasble is that for both years, OPEC's demand growth figures are significantly higher than those of the IEA.
OPEC's optimism is supported by stronger-than-expected economic performance in key economies such as Brazil, Russia, India and China, coupled with a recovery in the eurozone. Additionally, OPEC maintains a stable outlook for non-OPEC+ supply growth, primarily driven by the United States, Canada and Brazil.
Market Dynamics & the Road Ahead
Oil prices have risen since June, with WTI crude up around 8% to over $83 per barrel now. This rally is partly due to seasonal upticks in northern hemisphere demand and constrained supply. The IEA highlights that the recent price increases are also supported by declining crude stocks and geopolitical risks.
As we move forward, the oil market is poised between supply constraints and evolving demand dynamics. The IEA's forecast for lower growth in China's oil consumption and the continued rise in non-OPEC+ production will likely keep the market in a state of flux. However, with geopolitical risks and potential changes in monetary policy from the Federal Reserve, there are positive indicators for sustained demand and price stability.
3 Stocks to Buy
Considering this relatively bullish picture, we recommend Oil/Energy investors to accumulate stocks like SM Energy Company (SM - Free Report) , Sunoco LP (SUN - Free Report) and Tullow Oil (TUWOY - Free Report) . Sunoco currently sports a Zacks Rank #1 (Strong Buy), while SM Energy and Tullow carry a Zacks Rank #2 (Buy) each.
You can see the complete list of today’s Zacks #1 Rank stocks here.
SM Energy Company: SM beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters. The independent oil and gas exploration and production company has a trailing four-quarter earnings surprise of 13.8% on average.
SM is valued at around $5.1 billion. SM Energy has seen its shares increase 24.4% in a year.
Sunoco LP: The Zacks Consensus Estimate for 2024 earnings of Sunoco indicates 99.7% growth.
The leading energy infrastructure and fuel distributors is valued at around $5.7 billion. Sunoco has seen its stock rise 29.2% in a year.
Tullow Oil: TUWOY is valued at some $561.4 million. Over the past 60 days, the Zacks Consensus Estimate for 2024 earnings has increased 20%.
Tullow Oil enjoys a Value and Growth Score of A and B, respectively, each helping it round out with a VGM Score of A. The Africa-focused hydrocarbon producer and explorer shares have gained 5.6% in a year.