Oil prices dropped on Monday after OPEC reduced its demand growth forecasts, raising concerns about the Chinese economy, the world’s largest crude importer.
At 08:35 ET (12:35 GMT), Brent oil futures fell 1.9% to $77.57 a barrel, and West Texas Intermediate crude futures fell 2% to $74.05 a barrel.
OPEC Cuts 2024 Demand Growth Forecast
OPEC lowered its 2024 global oil demand growth forecast for the third time, now predicting an increase of 1.93 million barrels per day (bpd), down from 2.03 million bpd. The decrease was largely due to a reduced forecast for China, now expected to grow by 580,000 bpd instead of 650,000 bpd.
China’s Economic Challenges
Recent Chinese data showed consumer inflation eased unexpectedly in September, while producer inflation has been contracting for nearly two years. This ongoing deflation raises concerns for oil demand.
Plans for additional fiscal stimulus from China have also disappointed investors due to vague details about timing or scale. Traders are growing impatient with the slow pace of economic support measures.
Middle East Tensions
Oil prices were impacted by discussions of a potential ceasefire in the Middle East, specifically calls for peace between Israel and Hezbollah. As the conflict escalates, including the recent anniversary of the Israel-Hamas war, oil markets remain vigilant.
Fears of further conflict, particularly involving Iranian oil facilities, have contributed to rising crude prices in recent weeks due to heightened risk perceptions among traders.
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