Oil prices dropped in Asian trading on Tuesday, reversing last week’s gains. This decline comes as traders await crucial economic data and as OPEC reduced its 2024 oil demand growth forecast.
Prices had surged from seven-month lows last week, driven by concerns over a potential escalation in the Iran-Israel conflict. Reports suggested that an Iranian strike against Israel might occur this week, adding a risk premium to crude oil. However, overall gains were restrained by ongoing concerns about global demand. Weak economic data from China, a major oil importer, and fears of a U.S. recession also weighed on prices.
By 21:35 ET (01:35 GMT), Brent oil futures for October delivery had dropped 0.4% to $81.94 per barrel. Similarly, West Texas Intermediate (WTI) crude futures fell 0.4% to $77.98 per barrel.
OPEC Lowers Oil Demand Growth Forecast
OPEC announced a revision to its oil demand growth forecast for 2024. The organization now expects an increase of 2.11 million barrels per day, down from the previous estimate of 2.25 million barrels per day. In its monthly report released on Monday, OPEC cited ongoing challenges in China’s economic recovery from the COVID-19 pandemic as a significant factor in the revised forecast.
This downward adjustment raises questions about the feasibility of OPEC’s plans to start reducing its production cuts. The forecast cut intensifies concerns about a potential slowdown in global oil demand, especially in China, which is the world’s largest oil importer. OPEC is scheduled to meet soon to discuss future production strategies.
Economic Data to Provide Further Insights
Oil markets are also looking forward to key economic data releases this week, which may provide further insights into economic growth and interest rate trends.
On Wednesday, the Consumer Price Index (CPI) inflation data will be released, potentially influencing the outlook for U.S. interest rates. Traders are anticipating a possible rate cut by the Federal Reserve, ranging from 25 to 50 basis points in September.
Later in the week, data on U.S. industrial production and retail sales will be released. China will also provide updates on its industrial production and retail sales, offering additional insights into the world’s largest crude importer.
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