Oil prices stabilized on Wednesday in the global commodities market after falling dramatically in the previous few days, as some purchasing activity returned to the market at lower levels.
The Middle East wars boosted supply, but sluggish demand from China is also weighing on demand forecasts. ICE Brent dropped marginally to $73.99 per barrel. The US benchmark West Texas Intermediate fell 0.4% to $70.06 per barrel, from $70.38 at the previous session’s closing.
The International Energy Agency’s (IEA) weaker demand projections were basically in line with expectations, with selling pressure decreasing, according to an ING report.
The IEA’s monthly oil market report yesterday was largely bearish for the oil market, with the agency revising down its demand estimates for a third consecutive month this year. In its report, IEA now expects global oil demand to grow by 862,000 b/d in 2024, compared to previous estimates of 903,000 b/d.
This revision lower is largely due to a further slowdown expected in Chinese consumption, weighing on the global outlook, ING said in its commentary note. Meanwhile, demand growth estimates for 2025 were raised slightly to 998,000 b/d from earlier estimates of 954,000 b/d.
Total demand is now expected to average at 102.8 million b/d this year and 103.8 million b/d in 2025. OPEC has also lowered its forecasts for global oil demand for this year and next.
On the supply side, the IEA estimates non-OPEC+ production to increase by 1.5 million b/d this year and next. Globally, the agency expects production to increase by 660,000 b/d this year to 102.9 million b/d with production growth accelerating to around 2 million b/d for 2025 as some of the OPEC+ supply gradually returns to the market.
On Tuesday, Israeli Prime Minister Benjamin Netanyahu assured the US that his forces will attack Iranian military sites, not the nuclear and oil facilities that President Joe Biden previously warned against striking, according to The Washington Post.
Oil markets are watching for Israel’s retaliation over an early-October missile strike by Iran. Prices fell more than 4% in the prior session as the report eased concerns that the oil supply would be disrupted, resulting in the diminishing geopolitical risk premium.
