Oil rates decline to lowest mark since 2021
Date
9/18/2024 8:21:19 AM
(MENAFN) crude oil prices took a sharp downturn on Tuesday, reaching their lowest levels since 2021, following OPEC's decision to cut its demand growth forecasts for the current and next year. The global benchmark, brent crude, fell by 3.7percent to USD69.08 per barrel, marking the first time it has dipped below the USD70 threshold since December 2021. Meanwhile, the US benchmark, West Texas Intermediate (WTI), saw an even steeper decline of over 4 percent, settling at USD65.72 per barrel, its lowest point since May 2023.
In its monthly report released on Tuesday, OPEC projected that world oil demand will increase by approximately two million barrels per day (bpd) in 2024—an adjustment of 80,000 bpd down from its previous forecast. This marks OPEC's second consecutive reduction in demand estimates, with the organization's outlook remaining unchanged until last month, when the revision was first announced in July 2023.
China, the world's largest crude importer, was primarily responsible for the downgrade in demand expectations. OPEC reduced its forecast for China's demand growth in 2024 to 650,000 bpd, reflecting ongoing economic challenges in the country. While OPEC stated that China's economic growth is still expected to be well-supported, the report cautioned that headwinds in the real estate sector, combined with the rising adoption of LNG trucks and electric vehicles, could hinder future demand for diesel and gasoline.
Additionally, OPEC lowered its global demand growth estimate for 2025 to 1.74 million bpd, down from a previously projected 1.78 million bpd. The organization also stated that it anticipates crude demand from OPEC and its allies, collectively known as OPEC+, to reach 43.8 million bpd in the fourth quarter of this year.
As global oil prices continue to fluctuate amid shifting demand forecasts and economic uncertainties, market participants will be closely monitoring OPEC's assessments and their implications for future pricing and production strategies.
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