Oil prices declined on Thursday, 14 November, amid fears of a slowdown in global demand growth and increased production. The strengthening of the US dollar further increased pressure on the market, causing a decline in the cost of futures, Reuters reports.
Brent crude fell by 0.5% to $71.93 per barrel, while US WTI crude lost 0.6%, falling to $68.01 per barrel. The main reason for the decline, analysts say, is the recent revision of demand forecasts by the Organisation of the Petroleum Exporting Countries (OPEC). On Tuesday, OPEC lowered its demand growth forecast for 2024 to 1.82 million barrels per day, citing weak demand in China, India and other regions, which has raised concerns about a possible oversupply of oil on the market.
Stronger US dollar impacts the oil market
The dollar’s rise to a seven-month high against other currencies also put additional pressure on the oil market. This was the result of stable inflation growth in the US in October, which was in line with forecasts, which may prompt the Federal Reserve to cut rates further.
Analysts also point out that oversupply may persist in the market until 2025 if demand from China remains weak. According to Phillip Nova Senior Market Analyst Priyanka Sachdeva, China continues to be a weakness in global oil demand, which could lead to a long-term imbalance in the market.
EIA production forecasts
Meanwhile, the US Energy Information Administration (EIA) has raised its forecasts for US oil production, which is expected to reach a record 13.23 million barrels per day in 2024. The EIA also expects total global oil production to rise to 104.7 million barrels per day next year.
Uncertainty remains in the market, and market participants are awaiting a new report from the International Energy Agency (IEA), as well as data on US oil inventories, which should shed light on future price prospects.
