OPEC cuts demand forecast as China's economy slows
Oil prices on the New York fuel exchange are slightly rising, yet they remain close to the lowest levels seen this month. Brokers report that investors are concentrating on the fuel demand outlook after OPEC countries reduced their oil demand growth forecasts for this year and next.
On NYMEX in New York, a barrel of West Texas Intermediate oil for December delivery costs £56.30, an increase of 0.16 per cent.
Brent crude on ICE for December is priced at £59.34 per barrel after a rise of 0.18 per cent.
Oil prices in the US near lowest levels
Investors focus on the fuel demand outlook after OPEC countries reduced their oil demand growth forecasts on Tuesday for this year and 2025, marking the fourth consecutive reduction. This is due to a slowdown in the Chinese economy, the world's largest oil importer.
OPEC's monthly report states that world oil consumption will increase by 1.8 million barrels per day in 2024. This is 107 thousand barrels per day less than the cartel previously projected.
According to OPEC estimates, daily oil demand will increase by 1.5 million barrels per day in 2025, which is 103 thousand barrels per day less than the cartel's previous forecast.
The cartel estimates that global oil consumption will average 104 million barrels per day this year. However, OPEC indicates weaker fuel demand in Asian countries, including China, India, and Africa.
Since July, OPEC has already reduced its forecasts for global oil demand this year by almost 20 per cent. Nonetheless, OPEC's forecasts are more optimistic than those of other institutions, such as Wall Street banks and brokerage firms.
The world watches China
Meanwhile, Brent oil contract prices have fallen by about 18 per cent since early July, as investors remain increasingly uncertain that the over-a-year-long conflict in the Middle East will not disrupt oil supplies from the region.
The uncertain situation in the Chinese economy, where fuel demand has declined for several consecutive months, remains a focal point for market participants. The country's authorities face significant challenges in "reviving the economy."
Jun Rong Yeap, a market strategist at IG Asia Pte., noted that the uncertain prospects for fiscal stimulus in China dampen the oil demand outlook, while there is also the possibility of higher oil production in the US under Donald Trump's presidency.
He further mentioned that OPEC+ nations are also planning to boost their oil supplies.
