OPEC cuts demand forecast for the third time in three months

​OPEC now forecasts that oil demand will grow more slowly than previously expected for the rest of this year and into 2025. It is the third time in as many months that the Organization of the Petroleum Exporting Countries has downgraded its forecast.

The world consumes more than 100 million barrels of oil every day. And next year it will use even more. But OPEC expects demand to grow more slowly next year in one key place: China.

“The demand concerns there tend to overshadow almost everything else that’s happening,” said Tom Seng of the Ralph Lowe Energy Institute at Texas Christian University.

That’s because China imports more crude oil than any other country in the world, he said. And right now it’s having economic problems.

“And obviously economic problems almost always lead to lower energy demand,” Seng said.

In addition to its current economic woes, China is also moving much faster than many other countries to adopt electric cars, said Matt Smith of data and analytics company Kpler.

“So this is really starting to impact gasoline demand,” he said.

At the same time, he said, China is also converting many of its commercial vehicles to liquefied natural gas (LNG) rather than diesel.

“So we expect both gasoline demand to peak this year and next year and then diesel demand to peak in the country as well,” Smith said. “And so you suddenly see that in a country that was the engine of the world market, they are now really slowing down.”

According to Bob McNally of consulting firm Rapidan Energy Group, diesel demand is also weakening in countries other than China, including the United States.

“And diesel fuel is the fuel most closely linked to general economic activity, as diesel is used in trucks, some ships, airplanes, cargo planes and things like that,” he said.

He said slowing demand for diesel could be a sign of slowing economic growth.