Brent crude futures dropped below $70 a barrel on Tuesday for the first time since late 2021, following downward revisions to oil demand growth forecasts by both OPEC and the EIA.
As of 17:21 GMT, front-month November 2024 ICE Brent futures were trading at $69.25 per barrel, down from Monday’s close of $71.84 per barrel. Similarly, October 2024 NYMEX WTI futures were at $65.86 per barrel, compared to Monday’s settlement of $68.71 per barrel.
OPEC revised its global oil demand growth forecast downwards on Tuesday, cutting its estimate for 2024 by 80,000 barrels per day (bpd) to 2.03 million bpd. This adjustment was due to weaker-than-expected oil consumption in China. OPEC also reduced its 2025 forecast by 40,000 bpd to 1.74 million bpd.
This update comes just over a week after OPEC decided to postpone increasing oil output, a move that only partially addressed the ongoing supply-demand imbalance.
Warren Patterson, head of ING’s commodity research, commented, “While OPEC+ cuts make the market slightly tighter for the rest of this year, they do not resolve the anticipated surplus for next year.”
The EIA added to the bearish sentiment with its own forecast revisions. The agency now predicts global oil demand will grow by 900,000 bpd in 2024, down 200,000 bpd from its August estimate. The EIA also adjusted its 2025 demand growth forecast to 1.5 million bpd, a decrease of 100,000 bpd from last month.
In other news, oil prices had briefly recovered from yearly lows in the previous session due to concerns over Tropical Storm Francine, which is expected to make landfall in Louisiana. The state is home to several key oil refineries and petrochemical plants, as well as major LNG export facilities like Cheniere’s Sabine Pass plant and Sempra’s Cameron facility. Louisiana also hosts Port Fourchon, a vital energy hub for southeast Louisiana, which was closed for several weeks in 2021 following Hurricane Ida.