Oil Prices Under Pressure: OPEC Lowers Growth Forecast

Oil prices declined again on Tuesday, losing more than 3 percent, after the oil cartel OPEC downgraded its growth forecast for oil demand in 2024 and 2025. West Texas Intermediate (WTI) fell by more than 3 percent to around $66 per barrel. Brent oil also dropped, trading below $70 per barrel, marking its lowest level since December 2021. According to OPEC’s monthly report, oil demand in 2024 is expected to increase by only about 2.0 million barrels per day, which is 80,000 barrels less than previously anticipated. The growth forecast for 2025 has also been slightly adjusted downward. China significantly contributed to this revision. The country faces economic challenges due to a real estate crisis and is increasingly relying on natural gas, which is cheaper and more environmentally friendly than oil. “The demand for diesel has been dampened by weak industrial production, construction activities, and truck traffic, as well as the increased use of LNG trucks, which weakened the demand for diesel in the transport sector,” the report stated. Nonetheless, the OPEC forecast is above other industry estimates. The U.S. Energy Information Administration expects oil growth of 1.1 million barrels per day this year. Analysts on Wall Street also lowered their price forecasts for crude oil due to weak Chinese demand. Economic uncertainties in the U.S. and Europe, particularly after the end of the summer driving season, further pressured prices. The drop in oil prices also led to a decline in gasoline prices in the U.S., with one analyst even predicting that the national average could fall to $3 by the end of the year. On Monday, traders analyzed the possible impacts of Tropical Storm Francine, heading towards Texas and Louisiana, on oil and gas prices. Andy Lipow of Lipow Oil Associates expects only minimal impacts despite increasing winds that could turn the storm into a hurricane as early as Tuesday. “Unless there are floods or storm surges, this storm will not significantly affect supply or prices. Consumers will get their gasoline,” Lipow stated in a recent communication. Crude oil is currently trading near its lowest point in 2024. In recent weeks, futures have relinquished their previous gains of the year. WTI has seen a decline of about 5 percent since the beginning of the year, nearing its annual low. Brent oil has lost about 8 percent in the same period.