Oil Prices Dip Amid China’s Weak Demand and Bearish Market Outlook

Key Takeaways

• Price Trends: Oil prices dipped due to weak demand from China, with Brent and WTI futures down 0.9% each. MCX crude also saw a 0.48% decrease.
• Supply & Demand Concerns: U.S. and OPEC+ supply increases and China's economic uncertainties weighed on market sentiment. Chinese refining output declined for the seventh month in October.
• Market Forecasts: The IEA projects a supply surplus by 2025 despite OPEC+ cuts, while the EIA reported a rise in U.S. crude inventories and a sharp drop in gasoline and distillate stockpiles.

Petroleum Price: Current Price Trends for Brent, WTI, and MCX Crude

• Oil prices fell on Friday on signs demand in China, the world's biggest crude importer, continues to underperform amid its uneven economic recovery.
• Brent crude futures were down 65 cents, or 0.9%, at $71.91 a barrel by 0450 GMT. U.S. West Texas Intermediate crude futures were down 62 cents, or 0.9%, at $68.08. MCX crude oil prices opened at 5768 with a fall of 0.48%.

Supply and Demand Challenges: China's Impact and Global Supply Dynamics

• The prospect of higher supplies from the U.S. and OPEC+ along with doubts over China's economic recovery continue to be of concern, while the odds of a December rate cut are now "closer to a coin flip" under a less dovish Federal Reserve, Yeap added.
• China's oil refiners in October processed 4.6% less crude than a year earlier, falling year-on-year for a seventh month, amid the closures of some plants and reduced operating rates at smaller independent refiners, data from the National Bureau of Statistics showed on Friday.
• The decline in run rates occurred as China's factory output growth slowed last month and demand woes in its property sector showed few signs of abating even though consumer spending increased, government data showed.
• Oil prices also fell this week as major forecasters indicated market fundamentals remained bearish.
• The International Energy Agency forecast global oil supply will exceed demand in 2025 even if cuts remain in place from OPEC+, which includes the Organization of the Petroleum Exporting Countries and allies such as Russia, as rising production from the U.S. and other outside producers outpaces sluggish demand.

Petroleum News: Global Oil Market Forecasts and Inventory Data

• The Paris-based agency raised its 2024 demand growth forecast by 60,000 barrels per day to 920,000 bpd, and left its 2025 oil demand growth forecast little changed at 990,000 bpd.

• OPEC this week cut its forecast for global oil demand growth for this year and 2025, highlighting weakness in China, India and other regions, marking the producer group's fourth-consecutive downward revision to its 2024 outlook.

• U.S. crude inventories last week rose by 2.1 million barrels, the Energy Information Administration (EIA) said on Thursday, much more than analysts' expectations for a 750,000-barrel rise.

• Gasoline stocks fell by 4.4 million barrels last week to the lowest since November 2022, the EIA said, compared with analysts' expectations in a Reuters poll for a 600,000-barrel build. Distillate stockpiles, which include diesel and heating oil, also fell unexpectedly by 1.4 million barrels, the data showed.

Expert Insights on Market Projections and Price Movements

• In the week, Brent is expected to fall 2.2 per cent while WTI is set to decline 2.7 per cent. As per the Energy Information Administration (EIA) statistics, US crude oil inventories last week rose by 2.1 million barrels with the expectations for a 750,000-barrel rise.
• Simultaneously Gasoline stocks fell by 4.4 million barrels last week to the lowest since November 2022. Distillate stockpiles, which include diesel and heating oil, also fell unexpectedly by 1.4 million barrels, the data showed.