Oil Price Outlook for 2024 Lowered Due to Weak Chinese Demand and Rising Inventory Levels
Analysts have revised their 2024 oil price forecast downward as China’s fuel demand remains sluggish and inventory levels rise. The latest Reuters poll of 37 analysts and economists predicts that oil prices will average $82.86 per barrel in 2024, marking the fourth consecutive reduction in estimates from the previous forecast of $83.66 in July.
For this year, the poll projects an average oil price of $78.82, slightly lower than last month’s estimate of $79.22. Despite geopolitical tensions, oil prices have stayed below $90 per barrel due to weak crude intake from China and Europe, offsetting the impact of OPEC supply cuts.
Analysts expect global oil demand to grow by 1.0 to 1.3 million barrels per day in 2024, lower than the previous forecast range of 1.0 to 1.5 mbpd. OPEC has also reduced its demand growth forecast for 2024, citing weaker data and lower expectations from China.
The rise in U.S. inventory stock due to slowing consumption could further weigh on oil prices, according to industry experts. While conflicts persist in the Middle East and between Russia and Ukraine, the risk premium on oil has decreased as there have been no significant disruptions to oil flows.
However, analysts warn that a potential escalation of conflicts, along with supply disruptions in Libya and other regions, could push prices above $90 per barrel. The recent increase in floating storage and the planned production boost by the OPEC+ alliance are also factors putting pressure on oil prices.
OPEC+ has confirmed plans to unwind cuts of 2.2 million bpd starting in October, with the option to adjust supply levels as needed. Some analysts believe that OPEC’s production increase in the fourth quarter could shift market dynamics and focus on discipline in non-OPEC supply.
Overall, the outlook for oil prices in the coming years remains uncertain, with various factors influencing supply, demand, and geopolitical tensions. Investors and consumers should stay informed and monitor market developments to make well-informed decisions regarding their finances and energy costs.