Oil prices have been under tremendous pressure in the global commodities market due to a demand-supply imbalance. Last week, Brent dipped to around US$71 per barrel. ICE Brent fell 2.24% for Friday, remaining little around US$71 per barrel. Demand slowdown and a soft oil balance in 2025 are still a major issue.
While OPEC+ cuts make the market tighter for the rest of this year, they do not address the predicted excess next year. However, prices are higher in early morning trade today.
Saudi Arabia reduced its official selling prices (OSP) for all grades and regions, raising concerns about the demand situation. The Saudi flagship Arab Light into Asia was reduced from US$.70 to US$1.30 over the benchmark, the weakest level since November 2021.
Weak Chinese demand is likely to dominate discussions, along with the broader weakness in refinery margins around the globe. This will naturally lead to discussions over what options OPEC+ has to try to stabilise the market, ING said in a note.
Analysts said this would become increasingly more difficult next year unless OPEC+ takes action to address the expected 2025 surplus. The US election and its potential impact on the oil market will likely be another theme discussed, ING said.
A Trump victory could see a more hawkish US stance taken against Iran, potentially providing the opportunity for OPEC+ to unwind voluntary cuts next year. OPEC will release its monthly oil market report on Tuesday, and the market will be watching closely to see if the group makes any further revisions lower in its demand forecasts.
China will also release its first batch of trade data for August on Tuesday, which will provide some more insight into how Chinese oil demand is performing. The country’s cumulative imports over the first seven months of the year are already down 2.4% year-on-year.
The EIA will release its Short Term Energy Outlook on the same day, which will include its outlook for the global market and the latest US crude oil production forecasts. Then on Thursday, the IEA will release its monthly oil market report, where it will share its outlook for the remainder of this year and 2025.
