On Tuesday, Brent crude, the global benchmark for oil prices, fell by 3%, dipping below $70 per barrel for the first time in nearly three years. According to Reuters, this significant decline was triggered by the Organization of the Petroleum Exporting Countries (OPEC), which revised its global oil demand forecast downward for the second time this year.
During trading, Brent crude prices plummeted to $69.08 per barrel, marking the lowest level since December 2, 2021. The U.S. benchmark, West Texas Intermediate (WTI), also fell to $65.82 per barrel, reaching its lowest point since May 4 of the previous year.
OPEC’s latest forecast projects a global oil demand increase by only about 2 million barrels per day this year, reducing its previous estimate by approximately 80,000 barrels per day. Also, OPEC revised its demand growth forecast for next year to 1.7 million barrels per day, 40,000 barrels less than initially expected. This adjustment comes just a month after OPEC’s last update.
In its previous outlook, OPEC cited the economic slowdown in China, the world’s largest oil importer, and the resulting decline in oil demand as reasons for the downgrade.
Wall Street investment banks are also adjusting their forecasts, with Goldman Sachs highlighting the potential impact of increased electric vehicle adoption in China on fuel demand.
Morgan Stanley recently shared a similar outlook.
Morgan Stanley similarly noted that OPEC+ is expected to end its production cuts in December and return to previous production levels, which could lead to an oversupply in the oil market starting at the end of this year.
International oil prices have struggled recently, with Brent crude dropping 10% and WTI 8% last week. Concerns about an economic slowdown due to weaker U.S. employment and ongoing economic decline in China have contributed to the lowered oil demand projection.
On Monday, Brent rose by 1.1% and WTI by 1.5% due to hurricane forecasts in the U.S., but the following day, prices plummeted again.
As of 1:50 PM Eastern Time, Brent traded at $69.70 per barrel, a decline of $2.14 (3%) from the previous day. Overall, Brent has dropped by 9.6% this year. WTI also fell by $2.38 (3.5%), trading at $66.34 per barrel, bringing its decline this year to 7.4%.
