Oil Is Still Not Out of The Woods

This week, crude oil prices faced sharp declines due to a confluence of factors that weighed heavily on market sentiment.

Concerns over weak demand, particularly from China, and the easing of supply risks in the Middle East were central to the downward pressure on prices.

Simultaneously, a series of reports from major institutions like the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) lowered global demand forecasts for 2024, reinforcing the bearish outlook.

China’s Economic Slowdown Hits Demand Expectations

One of the most significant drivers behind the drop in oil prices was renewed concern over China’s slowing economy. China, as the world’s largest importer of crude oil, plays a pivotal role in shaping global demand.

Throughout the week, weak economic data from China, including persistently low inflation and sluggish consumer demand, added to fears that the country’s oil consumption might underperform expectations.

Despite Chinese government promises of stimulus measures, the lack of concrete action or significant fiscal boosts left markets jittery.

This uncertainty, combined with the deflationary signals from the world’s second-largest economy, prompted investors to downgrade their outlook on future oil demand??.

OPEC echoed these concerns, cutting its demand forecast for China. The organization now expects China’s oil demand growth to reach only 580,000 barrels per day (bpd) in 2024.