Crude oil futures fell during the Asian session on Wednesday. According to the New York Mercantile Exchange, November crude oil futures were trading at $69.63 per barrel, down 0.47%. Prices were at $69.55 per barrel in the previous session. Oil is expected to find support at $67.58 and resistance at $70.65. The dollar index contracts, which measure the performance of the US currency against six major currencies, fell 0.08% to $100.49. , Brent oil prices for November fell 0.49%, trading at $73.34 per barrel. The spread between Brent oil and crude oil contracts is $3.71 per barrel.
Crude oil prices fell on Tuesday: Crude oil prices fell significantly during trading on Tuesday. Concerns about weak global demand have increased, with expectations of an increase in oil supply in markets soon. Oil futures performance now: Crude oil futures fell 2.62%, recording $68.61 per barrel. Brent crude futures also fell 1.07%, reaching $72.17 per barrel.
Reasons for the decline in crude oil prices today: Crude oil prices fell significantly today, due to growing concerns about weak global demand for oil.
Negative economic data: The ZEW economic sentiment index in Germany recorded 3.6 points, which is less than market expectations of 17.1 points. The ZEW index for the eurozone also fell to 9.3 points, which was worse than the market expectations that expected it to grow to 16.3 points.
These indicators are considered early indicators of economic activity, and weak data raises concerns about the recovery in Europe, which weakens demand for oil.
UBS Bank Forecasts: UBS Bank lowered its forecast for oil prices during the period from 2024 to 2026. It expected the price of Brent oil to reach $75 per barrel in the fourth quarter of 2024, instead of $83. Forecasts for 2025 and 2026 were also cut by $5 each.
Rate cuts in focus as Fed meeting nears
A weaker US dollar index is seen as a key support for oil prices as markets prepare for today’s Fed meeting to discuss interest rate cuts. The central bank is expected to begin its easing cycle, although traders are divided over whether to cut by 25 or 50 basis points. Lower interest rates are seen as a positive sign for economic growth, which could help support demand for US fuel in the coming months.
China economic data disappoints: Chinese economic data released over the weekend showed continued weakness in the world’s largest oil importer. Industrial production and retail sales figures came in below expectations, with unemployment rising and house prices falling.
These readings raise concerns that slowing growth in China will weigh on oil demand. ANZ analysts expect Beijing to push ahead with stimulus measures to support growth, but they expect GDP to fall short of the government’s 5% target in the third quarter. On concerns about China, both OPEC and the International Energy Agency have cut their forecasts for oil demand growth this year. The forecasts sent oil prices to three-year lows last week, although they have since rebounded slightly.
Increased supply from Libya: Concerns about the return of Libyan oil supply to markets are contributing to the decline in prices. Kepler data shows that Libyan crude exports have reached 550,000 barrels per day, a significant increase. Other commodity futures: Heating oil futures fell 0.61% to $2.0840. Gasoline futures rose 0.07% to $1.9696. Natural gas futures also fell 0.21% to $2.368.
IEA cuts 2024 oil demand growth forecast
In its monthly report released on Thursday, the International Energy Agency cut its forecast for global crude oil demand growth in 2024 by 67,000 barrels per day. The expected growth is now 903,000 barrels per day, compared to a previous forecast of 970,000 barrels per day.
Key points from the report:
Growth forecast: The demand growth forecast has been revised down to 903,000 barrels per day.
Impact of economic factors: Global economic factors play a role in the downward trend.
Market performance: Data points to a possible decline in oil demand.
Demand side: The IEA kept its forecast for global oil demand growth in 2025 steady at 954,000 barrels per day. Global demand rose by only 800,000 barrels per day in the first half of 2024.
The agency also cut its forecast for total oil demand in 2024 to an average of 103 million barrels per day, compared to 103.1 million barrels. In 2025, the agency lowered its forecast to 103.9 million barrels per day from 104 million barrels. Slowing growth in China is expected to weigh on global oil demand this year.
Supply side: The International Energy Agency kept its forecast for non-OPEC+ oil production growth in 2024 at 1.5 million barrels per day, and maintained the same forecast for 2025. The global oil supply forecast for 2024 averaged 102.9 million barrels per day, with the 2025 forecast raised to 105 million barrels per day.
Production and refining: The agency lowered its forecast for global refinery production in 2024 to 83 million barrels per day, and in 2025 to 83.7 million barrels.
Russian oil: Russian oil exports fell by 290,000 barrels per day in August to 7 million barrels per day, reducing commercial export revenues by $1.6 billion to $15.3 billion.
