Oil prices experienced a slight decline early Thursday, influenced by expectations of increased global production and forecasts indicating weak demand growth. Additionally, a stronger dollar exerted further pressure on prices.
As of 01:33 GMT, Brent crude futures fell by 6 cents, or 0.08%, settling at $72.22 per barrel. Similarly, U.S. West Texas Intermediate (WTI) crude futures decreased by 13 cents, or 0.19%, to reach $68.30.
The U.S. Energy Information Administration (EIA) has marginally adjusted its projection for U.S. oil production upward, now estimating an average output of 13.23 million barrels per day (bpd) for this year. This figure reflects an increase of 300,000 bpd compared to last year's record of 12.93 million bpd and is higher than the previous forecast of 13.22 million bpd. Furthermore, the EIA has raised its global oil output forecast for 2024 to 102.6 million bpd, up from an earlier estimate of 102.5 million bpd. For 2025, the agency anticipates a global output of 104.7 million bpd, an increase from the prior expectation of 104.5 million bpd.
This update follows a recent revision by the Organization of the Petroleum Exporting Countries (OPEC), which on Tuesday lowered its forecast for global oil demand growth to 1.82 million bpd in 2024, down from the previously estimated 1.93 million bpd. This reduction was attributed to weak demand from China, India, and other regions, leading to a dip in oil prices to their lowest levels in nearly two weeks.
In contrast, the EIA's outlook for oil demand growth in 2024 is more conservative, predicting an increase of about 1 million bpd, which is an upward revision from its earlier estimate of approximately 900,000 bpd.
Market participants are keenly awaiting the release of the International Energy Agency's (IEA) oil market report later today, along with the EIA's data on U.S. crude oil and product inventories, which are expected to provide further insights for trading.
According to ANZ Research, "The weak demand outlook in China continues to dampen market sentiment. Additionally, the stronger U.S. dollar is creating significant headwinds for commodity prices."
The U.S. dollar reached a near seven-month high against major currencies on Wednesday after inflation data for October met expectations, suggesting that the Federal Reserve may continue its trend of rate cuts.
A stronger dollar typically makes commodities priced in U.S. dollars more expensive for buyers using other currencies, further contributing to the downward pressure on oil prices.
Zainab Y.
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