Oil Slips: Brent -0.5%, WTI -0.6% Amid Demand Woes
- Brent crude and WTI experienced slight declines, with a 0.5% and 0.6% drop respectively.
- The IEA adjusts its 2024 oil demand growth forecast downward amid slowing demand.
- U.S. crude inventories surge unexpectedly, signalling a shift in refinery operations and demand.
In the latest market developments, oil prices have seen a slight decline, with Brent crude oil falling by 37 cents to $81.23 a barrel and U.S. West Texas Intermediate (WTI) crude futures dropping by 44 cents to $76.20. This downturn follows the International Energy Agency (IEA) signalling a slowdown in demand growth for the current year, further exacerbated by an unexpected surge in U.S. crude inventories, which increased by 12 million barrels to 439.5 million barrels, surpassing the anticipated rise.
IEA Adjusts 2024 Demand Growth Forecast to 1.22M bpd
The IEA’s monthly report provides a comprehensive view of global oil demand. It slightly revises its 2024 growth forecast from 1.24 million barrels per day (bpd) to 1.22 million bpd. This change indicates a reduced optimism for oil demand growth. On the supply side, the agency has updated its forecast. It now expects an increase of 1.7 million bpd this year, up from the previous estimate of 1.5 million bpd. This adjustment, combined with a significant decrease in refining activity to its lowest level since December 2022, emphasises the complex interplay between supply and demand in the oil market.
U.S. Crude Inventories Surge Amid Global Recession Concerns
Economic indicators, including recessionary trends in Britain and Japan, have further affected market sentiment. Both countries have seen GDP contractions, with Britain’s economy shrinking by 0.3% in the last quarter of 2023, signalling a recession, and Japan’s economy also facing a downturn, complicating the global economic outlook and its impact on oil demand and pricing.
Alongside these broader economic changes, the oil market has experienced unexpected shifts in inventory data. Despite an overall increase in crude supplies, reductions in gasoline and distillate stockpiles were larger than expected, presenting a complex view of the oil market’s current state. As analysts and policymakers navigate these changing dynamics, external economic factors continue to influence the oil market’s direction.
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