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Oil Demand Dynamics for 2024: Asia-Pacific to Drive Growth
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Global oil demand is expected to experience a significant uptick in 2024, with projections indicating growth of 1.9 million barrels per day (bpd) compared to the previous year. This forecast, released by energy research firm Wood Mackenzie, aligns closely with estimates provided by the oil-producing group OPEC.
Considering the resilient demand expectations, we believe that oil’s current levels of around $78 allow long-term-oriented market participants to buy shares in quality companies at attractive prices. Investors interested in the sector could benefit from having top-ranked stocks like Valaris Limited (VAL - Free Report) , Murphy USA (MUSA - Free Report) and Sunoco LP (SUN - Free Report) in their portfolio.
Asia-Pacific to Play Key Role
According to WoodMac, the surge in demand will primarily be driven by the Asia-Pacific (APAC) region, which is expected to account for over 63% of the total increase.
China and India are set to play significant roles in driving this increased consumption, with the former expected to contribute 496,000 bpd and the latter 161,000 bpd to the rise in usage. Conversely, Europe is forecast to experience a decrease in oil demand by 44,000 bpd due to lackluster economic growth.
Wood Mackenzie emphasized the crucial role of Asia in the global oil markets, attributing the region's robust growth to factors such as sustained economic expansion and industrial development. Despite expectations of slower growth in 2025, the energy consultancy foresees APAC to remain a significant driver of oil demand, accounting for over 59% of the total increase.
A Few Red Flags
However, as demand escalates, concerns arise regarding balance in the oil market. Despite OPEC's decision in November 2023 to implement voluntary production cuts totaling 2.2 million bpd for the first quarter of 2024, there are indications that member countries may need to ramp up production to stabilize the market.
The geopolitical landscape, including tensions in the Red Sea region, has also impacted oil markets, with disruptions affecting the transit of oil products such as diesel, gasolin and jet fuel. These disruptions have led to increased demand for bunker fuel, further influencing market dynamics.
What Lies Ahead?
Overall, while the outlook for global oil demand in 2024 appears robust, uncertainties persist regarding production levels, geopolitical factors, and the pace of economic recovery, all of which could shape the trajectory of oil markets in the coming months.
3 Energy Stocks to Buy
Having gone through the report by energy research company Wood Mackenzie, investors interested in this space might consider the operators mentioned below. Each of these companies currently carries a Zacks Rank #1 (Strong Buy).
Valaris Limited: The 2024 Zacks Consensus Estimate for VAL indicates 324.1% year-over-year earnings per share growth.
Valaris is valued at around $4.8 billion. VAL has seen its shares fall 12.8% in a year.
Murphy USA: Murphy USA beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed in the other. It has a trailing four-quarter earnings surprise of 13.6%, on average.
Murphy USA is valued at around $8.7 billion. The company has seen its shares surge 61.2% in a year.
Sunoco LP: The 2024 Zacks Consensus Estimate for SUN indicates 34% year-over-year earnings per unit growth.
Sunoco is valued at around $6.2 billion. SUN has seen its units rise 33.7% in a year.
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Oil Demand Dynamics for 2024: Asia-Pacific to Drive Growth
Global oil demand is expected to experience a significant uptick in 2024, with projections indicating growth of 1.9 million barrels per day (bpd) compared to the previous year. This forecast, released by energy research firm Wood Mackenzie, aligns closely with estimates provided by the oil-producing group OPEC.
Considering the resilient demand expectations, we believe that oil’s current levels of around $78 allow long-term-oriented market participants to buy shares in quality companies at attractive prices. Investors interested in the sector could benefit from having top-ranked stocks like Valaris Limited (VAL - Free Report) , Murphy USA (MUSA - Free Report) and Sunoco LP (SUN - Free Report) in their portfolio.
Asia-Pacific to Play Key Role
According to WoodMac, the surge in demand will primarily be driven by the Asia-Pacific (APAC) region, which is expected to account for over 63% of the total increase.
China and India are set to play significant roles in driving this increased consumption, with the former expected to contribute 496,000 bpd and the latter 161,000 bpd to the rise in usage. Conversely, Europe is forecast to experience a decrease in oil demand by 44,000 bpd due to lackluster economic growth.
Wood Mackenzie emphasized the crucial role of Asia in the global oil markets, attributing the region's robust growth to factors such as sustained economic expansion and industrial development. Despite expectations of slower growth in 2025, the energy consultancy foresees APAC to remain a significant driver of oil demand, accounting for over 59% of the total increase.
A Few Red Flags
However, as demand escalates, concerns arise regarding balance in the oil market. Despite OPEC's decision in November 2023 to implement voluntary production cuts totaling 2.2 million bpd for the first quarter of 2024, there are indications that member countries may need to ramp up production to stabilize the market.
The geopolitical landscape, including tensions in the Red Sea region, has also impacted oil markets, with disruptions affecting the transit of oil products such as diesel, gasolin and jet fuel. These disruptions have led to increased demand for bunker fuel, further influencing market dynamics.
What Lies Ahead?
Overall, while the outlook for global oil demand in 2024 appears robust, uncertainties persist regarding production levels, geopolitical factors, and the pace of economic recovery, all of which could shape the trajectory of oil markets in the coming months.
3 Energy Stocks to Buy
Having gone through the report by energy research company Wood Mackenzie, investors interested in this space might consider the operators mentioned below. Each of these companies currently carries a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Valaris Limited: The 2024 Zacks Consensus Estimate for VAL indicates 324.1% year-over-year earnings per share growth.
Valaris is valued at around $4.8 billion. VAL has seen its shares fall 12.8% in a year.
Murphy USA: Murphy USA beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed in the other. It has a trailing four-quarter earnings surprise of 13.6%, on average.
Murphy USA is valued at around $8.7 billion. The company has seen its shares surge 61.2% in a year.
Sunoco LP: The 2024 Zacks Consensus Estimate for SUN indicates 34% year-over-year earnings per unit growth.
Sunoco is valued at around $6.2 billion. SUN has seen its units rise 33.7% in a year.