Oil Price Forecasts for 2024 Cut Again, Analysts Predict Continued Pressure on Prices
Analysts have once again lowered their 2024 oil price projections, marking the fifth consecutive month of downward revisions. Uncertainty surrounding OPEC’s plans and weaker demand have led to a dim outlook, with prices expected to remain under pressure despite geopolitical risks, according to a recent Reuters poll.
The poll, which surveyed 41 analysts and economists, projects an average price of $81.52 per barrel for 2024, down from the previous estimate of $82.86 in August. Similarly, prices for 2024 are expected to average $77.64, below last month’s forecast of $78.82.
Factors contributing to the recent weakness in oil prices include market concerns over OPEC’s production plans and softer Chinese demand indicators, as highlighted by Roger Read, Senior Energy Analyst at Wells Fargo.
Global oil demand growth for 2024 is now expected to range from 0.9 to 1.2 million barrels per day, a downgrade from previous estimates of 1 to 1.3 million barrels per day. Both OPEC and the International Energy Agency have revised their forecasts downwards, citing sluggish Chinese demand as a key factor.
Despite geopolitical uncertainty, most analysts believe that the war-related risk premium in oil prices has diminished due to ample supply. However, the premium could return if tensions escalate, particularly in the Middle East, according to industry experts.
Oil prices, which surged above $90 a barrel earlier this year, have since retreated below $70 a barrel due to weak demand trends and oversupply. While OPEC+ is expected to proceed with a planned production increase in December, output cuts may be necessary to address overproduction within the group.
Overall, the outlook for oil prices in 2024 remains subdued, with analysts cautioning that prices could deteriorate further if demand fails to pick up and global supply remains abundant.