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WTI crude oil futures rose over 3% to above $69 per barrel on Thursday, driven by disruptions from Hurricane Francine, which forced the shutdown of around 670k barrels a day from the Gulf of Mexico – over a third of the area’s oil output. Despite this recent uptick, oil prices have been under pressure this year due to worries about slowing demand in major markets like China and the US. A sharp decline followed OPEC’s decision to lower its demand growth forecast for the second time in two months, alongside slowing crude oil imports from China in 2024. Still, oil prices remained near their lowest point since May 2023, despite a smaller-than-expected inventory build. US crude inventories rose by 803k barrels (Figure 1), below the anticipated 1 million, while gasoline and distillate stocks rose more than expected. |
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Figure 1: NYMEX crude oil front-month contract ($/barrel), EIA commercial crude oil stocks (thousand barrels) Additionally, the EIA reduced its oil price projections for Q4 and 2025 after OPEC’s continued downward revisions in demand forecasts. Concerns persist over weakening demands in key markets, particularly China, where the rise of electric vehicles has dampened consumption. The IEA also forecasted a potential supply surplus in 2024, even if OPEC+ extends its production cuts. Additionally, weak data from Europe intensified concerns about energy demand, compounded by ongoing worries about soft Chinese consumption. Furthermore, Bank of America revised its 2025 oil forecast, lowering Brent prices from $80 to $75 and the US benchmark from $75 to $71. Saudi Aramco’s decision to lower its October official selling prices indicated expectations of weak demand in Asia. Additionally, potential increase in oil supply from Libya, due to political factions nearing an agreement, added downward pressure. |