Overview of Current Crude Oil Prices
Crude oil prices showed relative stability on Thursday, trading around $70.50 per barrel in Asian markets. This comes ahead of the upcoming EIA inventory release from the United States. Specifically, WTI crude oil futures dipped by 0.27%, settling at $70.39, while Brent crude edged down by 0.04% to $74.22. This decline follows a 4% drop on Tuesday, driven by ongoing uncertainties surrounding the conflict in the Middle East.
According to the API’s Weekly Statistical Bulletin, U.S. crude oil inventories decreased by 1.58 million barrels for the week ending October 11, 2024. This decrease follows a significant increase of 10.9 million barrels in the previous week. Notably, this marks the sixth inventory draw in the past eight weeks, contrary to market expectations of a 2.3 million barrel increase.
Impact of China’s Economic Slowdown on Demand
Crude oil demand has faced challenges, particularly following the COVID-19 pandemic, with China emerging as a significant obstacle to price recovery. Leading energy organizations, including OPEC, IEA, and EIA, have adopted a bearish outlook on the oil market. They have revised down their demand estimates for the third consecutive month, citing anticipated further slowdowns in Chinese consumption.
In September, Chinese oil imports fell to 45.5 million tons, marking a 7.4% decline from August and equivalent to 11.1 million barrels per day (mbpd). Looking ahead to the fourth quarter, Chinese imports are expected to average around 11 mbpd. Furthermore, oil demand growth is projected to be no more than 300,000 barrels per day next year. This slowdown is attributed to increasing adoption of electric vehicles and liquefied natural gas-fueled trucks in China.
Global Crude Oil Supply and Demand Balance
Despite OPEC+ efforts to curb production by 6% over the past two years, the global crude oil market remains in surplus. OPEC+ announced on September 5 that it would pause its planned crude production increase of 180,000 barrels per day in October and November, attributing this decision to recent price weakness and fragile global energy demand.
Saudi Arabia is reportedly prepared to abandon its unofficial oil price target of $100 per barrel in a bid to regain market share. The kingdom plans to return to its scheduled crude production starting December 1. In September, OPEC crude production fell by 480,000 barrels per day to an eight-month low of 26.51 million barrels per day. In contrast, non-OPEC+ production, primarily from the Americas, is expected to grow by 1.5 million barrels per day, while OPEC+ output is projected to contract by 820,000 barrels per day.
Overall, analysts anticipate a surplus in the global oil market of 1-1.5 million barrels per day in 2025, with global oil demand expected to reach 103.84 million barrels per day, reflecting an annual growth of 998,000 barrels per day.
Related topics:
