Oil prices continue to be under pressure, trading near their lowest levels in two weeks, as concerns over weakening global demand and OPEC’s downgraded forecasts weigh heavily on the market.
At 1040 GMT on Wednesday, Brent futures were up 49 cents, or 0.68%, to USD 72.38 a barrel, while U.S. West Texas Intermediate (WTI) crude futures were up 48 cents, or 0.70%, to USD 68.60. However, these modest gains only partially offset the significant losses seen in the previous two sessions, which saw a 5% drop in prices.
“Crude oil prices edged higher as tightness in the physical market offset bearish sentiment on demand. Buyers in the physical market have been particularly active, with any available cargoes being snapped up quickly,” said ANZ analysts in a note. But the analysts acknowledged that falling demand projections and weakness in major consumer China continued to weigh on market sentiment and crude prices.
On Tuesday, OPEC lowered its global oil demand growth forecast for this year and next, citing weakness in China, India, and other regions. This marked the fourth straight downward revision by the producer group, a clear indication of the growing concerns about the trajectory of global oil consumption.
“All these developments keep the risks surrounding oil prices tilted to the downside, suggesting that WTI crude oil may soon visit its September lows of around USD 65.70,” said Charalampos Pissouros, senior analyst at XM.
The International Energy Agency is set to publish its updated demand estimate on Thursday, and the market will be closely watching to see if the agency’s outlook aligns with OPEC’s more pessimistic projections.
Aside from demand-side issues, the oil market is also keeping a close eye on the potential for supply disruptions. Barclays analysts note that markets could still face disruption from Iran or further conflict between Iran and Israel. The appointment of U.S. Senator Marco Rubio, known for his hardline stance on Iran, as the next Secretary of State could also have bullish implications for prices if it leads to tighter sanctions on Iranian oil exports.
Iran’s oil minister, however, has stated that the country has made plans to sustain its oil production and exports and is ready for possible oil restrictions from the U.S.
On the inventory front, the market is awaiting the release of the American Petroleum Institute’s (API) data on Wednesday, which is expected to show a 100,000-barrel rise in crude stockpiles for the week ending November 8. This data could provide further insight into the state of oil supply and demand dynamics.