Oil prices fell 2% on Monday as the Organisation of the Petroleum Exporting Countries (OPEC) again lowered its outlook for 2024 and 2025 global oil demand growth and this led the international crude benchmark to fall to $77.
Brent crude futures settled $1.58, or 2%, lower at $77.46 per barrel and the US West Texas Intermediate (WTI) crude futures fell $1.73, or 2.29%, to $73.83 per barrel.
In its October monthly report, OPEC said world oil demand will rise by 1.93 million barrels per day in 2024, down from the growth of 2.03 million barrels per day expected last month.
This marked the third straight month that OPEC had reviewed the market downward after it kept the forecast unchanged since it was first made in July 2023.
China accounted for the bulk of the 2024 downgrade with the cartel trimming its Chinese growth forecast to 580,000 barrels per day from 650,000 barrels per day.
While government stimulus measures will support fourth-quarter demand, OPEC said oil use is facing headwinds from economic challenges and moves towards cleaner fuels.
The International Energy Agency (IEA), which represents industrialised countries, sees much lower demand growth than OPEC of 900,000 barrels per day in 2024. The IEA is scheduled to update its figures on Tuesday.
China’s stimulus plans failed to inspire investor confidence while markets kept watching for potential Israeli attacks on Iranian oil infrastructure.
China’s crude imports for the first nine months of the year fell nearly 3 per cent from last year to 10.99 million barrels per day.
Declining Chinese oil demand caused by the growing adoption of electric vehicles (EV), as well as slowing economic growth following the COVID-19 pandemic, has been a drag on global oil consumption and prices.
The news from China outweighed market concerns over the lingering possibility that an Israeli response to Iran’s October 1 missile attack could disrupt oil production.
The US has called on Israel to ensure its response to the attack does not create more problem, so it can avoid triggering a broader war in the Middle East.
