HOUSTON, Sept 10 (Askume) – Global oil benchmark Brent crude futures closed at their lowest since December 2021 as OPEC+ cut its demand forecast for this year and 2025, citing Tropical Storm Francine.
Brent crude oil futures settled at $69.19 a barrel, down $2.65, or 3.69%. US West Texas Intermediate (WTI) crude oil settled at $65.75 a barrel, down $2.96, or 4.31%.
After rising about 1% on Monday, both benchmarks were down more than $3 on the day. WTI crude oil futures fell more than 5% on Tuesday, hitting their lowest level since May 2023.
On Tuesday, the Organization of Petroleum Exporting Countries (OPEC) said in its monthly report that world oil demand will grow by 2.03 million barrels per day in 2024, lower than last month’s forecast of 2.11 million barrels per day.
OPEC had kept this forecast unchanged until last month since it was first implemented in July 2023.
OPEC lowered its forecast for global demand growth in 2025 to 1.74 million barrels per day from 1.78 million barrels per day. Oil prices fell on weak global demand prospects and expectations of supply growth.
Moreover, the US Energy Information Administration (EIA) said on Tuesday that global oil demand could rise to record levels this year , while production growth will be lower than previously estimated.
The EIA said global oil demand is expected to average 103.1 million barrels per day this year, an increase of about 200,000 barrels per day from its previous forecast of 102.9 million barrels per day.
Even after the release of the EIA forecast, oil prices remained low as concerns about China weighed on prices.
Data released on Tuesday showed China’s exports in August grew at the fastest pace in nearly a year and a half, but imports disappointed amid weak domestic demand.
Meanwhile, Asian refiners’ margins improved as diesel and gasoline supplies increasedLast week it fell to its lowest seasonal level since 2020.
“Oil demand in developed economies has barely grown this year. China’s fiscal stimulus has not boosted manufacturing; this is a key reason for the decline in China’s diesel demand,” said oil market strategist Clay Siegel.
Phil Flynn, senior analyst at Price Futures Group, said investors expect the global economy to slow.
Energy stocks were the biggest losers in the S&P 500 on Tuesday . Hess (HES.N) , Chevron (CVX.N) , Occidental Petroleum (OXY.N) , Halliburton (HAL.N) , SLB (SLB.N) , Ovintiv (OVV.N) , Devin Energy (DVN.N) each hit new 52-week lows on Tuesday.
US production affected by storm
Meanwhile, the US Bureau of Safety and Environmental Enforcement said on Tuesday thatAs Tropical Storm Francine approaches the Gulf of Mexico, operators have had to shut down nearly a quarter of their offshore crude oil production.
The Gulf of Mexico contributes about 15% of the U.S.’s total domestic oil production and 2% of total natural gas output, according to federal data.
The National Hurricane Center said the storm was expected to become a hurricane on Tuesday.
ExxonMobil (XOM.N) , Shell (SHEL.L) and Chevron (CVX.N) have laid off offshore workers and halted some oil and gas operations in the Gulf of Mexico.
Analysts said the production shutdowns so far have failed to offset weak demand sentiment and support prices.
Meanwhile, a broader Askume survey on Tuesday showed US crude oil and distillate inventories were expected to have risen last week, while gasoline inventories were likely to have fallen.
The survey comes after the industry group released a report at 4:30 p.m. ET (2030 GMT) on Tuesday and the U.S. Energy Information Administration released a report at 10:30 a.m. ET (1430 GMT) on Wednesday.
