OPEC cuts oil demand forecast, crude prices fall
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The news: Oil prices fell over 2% after OPEC cut its global oil demand growth forecast for 2024 and 2025, its third consecutive downward revision, primarily due to weaker Chinese demand.
The numbers: The organisation now expects oil demand to rise by 1.93 million barrels per day (bpd) in 2024, down from its previous forecast of 2.03 million bpd.
OPEC’s forecast for China, the world’s biggest importer of crude oil, was lowered from 650,000 bpd to 580,000 bpd as oil imports fell for the fifth consecutive month.
Brent crude futures, the global benchmark, dropped to USD77.44 ($115.16) per barrel, while West Texas Intermediate (WTI) slid to USD73.92.
The context: The weaker demand forecast was driven by China’s economic slowdown, falling oil imports and a shift towards cleaner energy.
OPEC+, comprising the Organiszation of the Petroleum Exporting Countries and allies such as Russia, has delayed some production hikes due to the falling oil prices.
The price fall also followed weak inflation and trade data in China, which signalled sluggish domestic demand despite Chinese officials' latest talk of stimulus. Markets remain alert to a potential Israeli attack on Iranian oil infrastructure.
The International Energy Agency (IEA), which represents developed nations, anticipates much slower demand growth than OPEC, projecting 900,000 barrels per day in 2024. It is due to release updated figures on Tuesday.
The sources: OPEC report, Reuters
