On Tuesday, September 10, international crude oil prices plunged to a 33-month low (close to a three-year low), with benchmark Brent crude futures falling below $70 per barrel for the first time since December 2021. This came shortly after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) cut its global oil demand forecast for this year and 2025.
Brent crude futures fell $2.33, or 3.24 percent, to $69.51 a barrel. U.S. West Texas Intermediate crude lost $2.50, or 3.64 percent, to $66.21. Both benchmarks had risen about 1 percent on Monday. At home, crude oil futures were trading 4.19 percent lower at $69.51 a barrel. ₹5,534 per barrel on the Multi Commodity Exchange (MCX).
Crude oil near three-year low: What’s weighing on prices?
-OPEC said in its monthly report on Tuesday that global oil demand will rise by 2.03 million barrels per day (bpd) in 2024, down from last month’s forecast of growth of 2.11 million bpd. Until last month, OPEC had kept the forecast unchanged since it was first made in July 2023.
-OPEC also lowered its estimate for global demand growth in 2025 to 1.74 million bpd from 1.78 million bpd. Oil prices fell due to a weakening global demand outlook and expectations of an oil supply glut with the Libya deal and the group’s output.
-Chinese data on Monday showed consumer inflation accelerated in August at its fastest pace in half a year, though domestic demand remained fragile and producer price deflation worsened. Data released on Tuesday showed China’s exports grew in August at their fastest pace in nearly a year and a half, but imports disappointed and domestic demand was depressed.
“If we lose China, this market is going to be in trouble because OPEC simply can’t cut enough to offset the position of the U.S. and Brazil, and some of the other reserves that are in operation,” said John Kilduff, a partner at Again Capital.
Tropical Storm Francine moved through the Gulf of Mexico on Tuesday and was on track to become a hurricane, the U.S. National Hurricane Center reported.
Exxon Mobil (XOM.N), opens new tab, Shell (SHEL.L), opens new tab and Chevron (CVX.N), opens new tab have cut offshore staff and halted some oil and gas operations at facilities in the Gulf of Mexico. Exxon cut production at its Hoover oil facility, about 150 miles east of Corpus Christi, Texas.
Chevron pulled out workers from four offshore facilities and halted oil and gas production at two. Shell cut production at one platform, moved workers from three facilities and halted drilling at two.
But production disruptions have failed to offset weak demand sentiment, analysts said.
“We have a hurricane coming into the Gulf and we’re still selling a lot here,” said Again Capital’s Kilduff.
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