Oil News: 2024 Supply Surge and Weak Demand Set the Stage for Lower Prices…

At 09:30 GMT, Light Crude Oil Futures are trading $70.35, down $0.23 or -0.33%.

Geopolitical Tensions and OPEC+ Cuts Support Prices

Oil prices steadied on Wednesday after falling over 4% the previous day due to easing concerns about Israeli strikes on Iranian oil sites. Despite this, tensions between Israel and Iran-backed Hezbollah still pose a risk of supply disruption.

OPEC+ production cuts remain in place until December, providing some support. However, analysts warn that while the market may tighten by year-end due to OPEC+ constraints, 2025 is expected to bring ample supply, potentially driving prices lower. Tamas Varga of PVM highlighted that 2025 could see more substantial downward pressure on prices.

Weak Chinese Demand Dampens Optimism

China’s sluggish demand remains a significant concern. Both the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) cut their global demand growth forecasts for 2024. OPEC reduced its estimate to 1.93 million barrels per day (bpd), with China contributing to much of the downgrade. China’s economic struggles and the shift to cleaner fuels have kept demand growth low.

Despite potential economic stimulus measures, China’s oil demand growth is expected to reach only 580,000 bpd in 2024, further dampening global demand projections.

OPEC+ Production and Global Supply Outlook

OPEC+ production cuts continue, with September output dropping by 557,000 bpd due to unrest in Libya and cuts by Iraq. Despite these reductions, the IEA forecasts a surplus in early 2024, driven by rising non-OPEC production from countries like the U.S. and Brazil.