Oil prices bounced back on Wednesday after setting a record of 34-month low due to concern of lower global demand. Brent futures grew 39 cents or 0.56% to $69.58 a barrel at 0931 GMT+7, and the WTI gained 43 cents or 0.65% to $66.18 per barrel.
On Tuesday, OPEC made the decision to reduce its projection for global oil demand growth in 2024, citing data obtained throughout the year so far and also revising down its expectations for the following year. This adjustment marks the group’s second consecutive decrease in forecast.
The revised forecast highlights the ongoing dilemma faced by OPEC+, which comprises the Organization of the Petroleum Exporting Countries and allies like Russia, in their efforts to stabilize the market. Given the recent drop in oil prices to the lowest level of 2024, OPEC+ recently postponed plans to increase oil production.
OPEC’s monthly report released on Tuesday indicated a projected increase in global oil demand of 2.03 million barrels per day (bpd) in 2024, a decrease from the previously expected growth of 2.11 million bpd.
Notably, China played a significant role in this downgrade, with OPEC adjusting its prediction for Chinese growth to 650,000 bpd from 700,000 bpd, citing economic challenges and a shift towards cleaner energy sources as contributing factors.
Following the release of the report, oil prices experienced a decline, with Brent crude dropping below the crucial support level of $70 per barrel.
Meanwhile, OPEC expressed optimism in the economic sphere by slightly increasing its forecast for 2024 economic growth to 3% from 2.9%. The organization also kept its view unchanged for 2025 at 2.9% while hinting at the possibility of an upward adjustment in the future.
OPEC revised its global oil demand growth estimate to 1.74 million bpd from 1.78 million bpd, which aligns with industry expectations. OPEC+ has been implementing production cuts since late 2022 to uphold market stability, with most measures scheduled to remain in place until the end of 2025.
OPEC+ was scheduled to commence the reversal of the latest 2.2 million bpd production cuts starting in October. However, the group opted to postpone this plan for two months following a decline in oil prices.
