Oil prices ease on fears of higher output, sluggish demand
Shafaq News/Oil prices slipped in early trade on Thursday, reversing most of the previoussession's gains, weighed down by worries of higher global production amid slowdemand growth, with a firmer dollar exacerbating the declines.
Brent crudefutures fell 35 cents, or 0.5%, to $71.93 a barrel by 0400 GMT. U.S. West TexasIntermediate crude (WTI) futures declined 42 cents, or 0.6%, to $68.01.
"Oil istackling the (earlier) weaker demand forecast narrative by OPEC, who deferredrolling back additional production for yet another month, fearing the adverseeffect on prices," said Phillip Nova's senior market analyst PriyankaSachdeva in an email.
On Tuesday,the Organization of the Petroleum Exporting Countries cut its global oil demandgrowth forecast to 1.82 million bpd in 2024, down from 1.93 million bpdforecast last month, on weak demand in China, India and other regions, sendingoil prices to their lowest in nearly two weeks.
Meanwhile,the U.S. Energy Information Administration has slightly raised its expectationof U.S. oil output to an average 13.23 million barrels per day this year, or300,000 bpd higher than last year's record 12.93 million bpd, and up from 13.22million bpd forecast earlier.
The agencyalso raised its global oil output forecast for 2024 to 102.6 million bpd, fromits prior forecast of 102.5 million bpd. For next year, it expects world outputof 104.7 million bpd, up from 104.5 million bpd previously.
The EIA'soil demand growth forecasts are weaker than OPEC's, at about 1 million bpd in2024, although that is up from its prior forecast of about 900,000 bpd.
Marketparticipants are now waiting for the International Energy Agency's oil marketreport, due later in the day, and the EIA's U.S. crude oil and productstockpile data for further trading cues.
Concernsabout China's demand remains a key contributor to softening prices, analystssay.
"Despitevarious stimulus measures implemented by Chinese authorities, there has beenlittle to no improvement in economic activity or sentiment within mainlandChina," said Phillip Nova's Sachdeva.
Chinacontinues to be the “sore joint” for oil demand and the primary reason why oilmarkets are bracing for an oversupply in 2025, she added.
Alsoweighing on prices, the U.S. dollar rose to near a seven-month high againstmajor currencies on Wednesday after data showed U.S. inflation for Octoberincreased in line with expectations, suggesting the Federal Reserve will keepcutting rates.
"...Thestronger USD is creating strong headwinds for commodities," ANZ Researchsaid in a note.
A firmerdollar makes commodities priced in the greenback expensive for buyers usingother currencies.
(Reuters)
