Oil prices edged down slightly over the past few days, as expectations of increased global production overshadowed weak demand growth forecasts, while a strong dollar further pressured prices.
Brent crude futures fell 0.6%, to $71.83 a barrel. U.S. West Texas Intermediate crude (WTI) futures declined 48 cents, or 0.7%, to $67.95, as of Thursday at 11:27 GST, Reuters data showed.
The US Energy Information Administration (EIA) has adjusted its US oil output forecast, projecting an average of 13.23 million barrels per day (bpd) this year—300,000 bpd higher than last year’s record and up from a previous forecast of 13.22 million bpd. The agency also increased its global oil output prediction for 2024 to 102.6 million bpd.
OPEC recently lowered its global oil demand growth forecast for 2024 to 1.82 million bpd, down from 1.93 million bpd, citing weak demand in China, India, and other regions. This adjustment has contributed to oil prices reaching their lowest in nearly two weeks. In contrast, the EIA forecasts a more modest demand growth of about 1 million bpd for 2024, up from an earlier estimate of 900,000 bpd.’
“Despite low demand forecasts and speculation that the Trump administration might soon adopt policies to increase supply, prices largely ignored these factors,” said Mohamed Hashad, Chief Market Strategist, Noor Capital. “Recent US commercial oil inventories dropped to 415 million barrels, the lowest in several years, contributing to the rise in U.S. crude.”
The continuous rise of the US dollar has also impacted oil prices negatively, given the correlation between a strong dollar and lower commodity prices. Further, the election of Donald Trump as U.S. president in 2024 has fueled speculation regarding potential policy changes.
“The newly elected president of the United States is expected to adopt policies that support fossil fuel production in the U.S. and encourage more oil and natural gas extraction in the coming period,” Hashad said. “This would positively impact production levels but negatively affect prices.”
