Oil Prices Slide Amid Rising Output and Weak Demand Forecasts

Key Takeaways:

• Oil prices declined as Brent crude futures fell by 0.5% to $71.93 per barrel, and WTI crude dropped by 0.6% to $68.01 per barrel in early Thursday trading.
• Concerns of oversupply and slow demand growth weighed on prices, with a stronger U.S. dollar further pressuring the market.
• OPEC revised its 2024 global oil demand growth forecast down to 1.82 million barrels per day (bpd), from 1.93 million bpd, citing weak demand in China and India.

Petroleum Price Declines as Production Outpaces Demand Growth

• Oil prices slipped in early trade on Thursday, reversing most of the previous session's gains. Prices were weighed down by concerns about higher global production amid slow demand growth, with a stronger dollar further exacerbating the decline.
• Brent crude futures fell by 35 cents, or 0.5%, to $71.93 a barrel by 0400 GMT. U.S. West Texas Intermediate (WTI) crude futures declined by 42 cents, or 0.6%, to $68.01. MCX crude oil prices opened at 5746, reflecting a fall of 0.86%.

OPEC and EIA Diverge on Oil Demand and Output Forecasts

• On Tuesday, the Organization of the Petroleum Exporting Countries (OPEC) cut its global oil demand growth forecast for 2024 to 1.82 million barrels per day (bpd), down from 1.93 million bpd forecasted last month. This reduction was attributed to weak demand in China, India, and other regions, pushing oil prices to their lowest in nearly two weeks.

• Meanwhile, the U.S. Energy Information Administration (EIA) has slightly raised its forecast for U.S. oil output to an average of 13.23 million bpd this year, 300,000 bpd higher than last year’s record of 12.93 million bpd and up from the previously forecasted 13.22 million bpd.

• The EIA has also raised its global oil output forecast for 2024 to 102.6 million bpd, up from its previous forecast of 102.5 million bpd. For 2025, the agency now expects global output to reach 104.7 million bpd, up from 104.5 million bpd.

• The EIA’s oil demand growth forecasts are lower than OPEC’s, at about 1 million bpd for 2024, although this is an increase from the previous forecast of around 900,000 bpd.

• Market participants are now awaiting the International Energy Agency's oil market report, due later in the day, and the EIA's U.S. crude oil and product stockpile data for further trading insights.

Petroleum News from Across the World

• The U.S. Energy Information Administration (EIA) has slightly raised its forecast for U.S. oil output to an average of 13.23 million bpd this year, 300,000 bpd higher than last year's record of 12.93 million bpd and up from the previous forecast of 13.22 million bpd.

• The agency has also raised its global oil output forecast for 2024 to 102.6 million bpd, from the prior forecast of 102.5 million bpd. For the following year, it expects world output to reach 104.7 million bpd, up from 104.5 million bpd.

• This adjustment comes after OPEC recently lowered its global oil demand growth forecast for 2024 to 1.82 million bpd, down from 1.93 million bpd forecasted last month. This cut is due to weaker demand in China, India, and other regions, sending oil prices to a near two-week low.

• The EIA’s demand growth forecast remains below OPEC's, at about 1 million bpd for 2024, though this is up from its prior forecast of 900,000 bpd.

Expert Opinion on Petroleum Market Trend

A weak demand outlook in China continues to weigh on market sentiment. The stronger U.S. dollar is creating headwinds for commodities. Oil is dealing with OPEC’s cautious demand forecast, as OPEC has again postponed any rollback of additional production cuts, wary of the potential impact on prices. Oil prices have edged lower amid signs of possible de-escalation in the Middle East, a surging U.S. dollar, and ongoing demand concerns.