Energy
Tuesday, August 13th, 2024 2:49 pm EDT
Key Points
- U.S. Crude Oil Prices Decline: U.S. crude oil prices fell over 1% on Tuesday due to concerns about slowing global demand, particularly in China, which overshadowed geopolitical tensions between Iran and Israel.
- Global Demand and Forecast Adjustments: The International Energy Agency (IEA) and OPEC have both indicated softening consumption in China, leading OPEC to lower its demand growth forecast by 135,000 barrels per day for the year. The IEA also predicts a potential crude oil surplus by 2025, even with continued OPEC production cuts.
- Geopolitical Tensions and Market Reactions: Although U.S. crude prices had previously surged over 4% due to fears of supply disruptions related to a potential conflict between Israel and Iran, these concerns are viewed as low-probability events. Analysts believe that if U.S. crude surpasses key resistance levels, it could rise to the mid-to-high $90s.
U.S. crude oil prices fell by over 1% on Tuesday as concerns about slowing global demand, particularly in China, outweighed geopolitical tensions between Iran and Israel. The market’s focus has shifted back to fundamentals after the International Energy Agency (IEA) and OPEC highlighted weakening consumption in China. West Texas Intermediate (WTI) crude for September settled at $79.01 per barrel, marking a 1.31% drop, while Brent crude for October fell by 1.28% to $81.25 per barrel. Despite these declines, both WTI and Brent have posted gains year-to-date.
The IEA reported that global oil demand in the second quarter increased at its slowest pace since late 2022, with a growth of only 710,000 barrels per day. OPEC also revised its demand growth forecast downward by 135,000 barrels per day for the year, citing China’s economic softness. The IEA projects a crude oil surplus by 2025, even if OPEC continues its production cuts, due to rising output from countries like Brazil, Canada, Guyana, and the U.S.
Earlier in the week, U.S. crude had surged over 4% amid rising tensions between Israel and Iran, which prompted the Pentagon to accelerate the deployment of a carrier strike group to defend Israel. Concerns over potential disruptions in oil supply through the Strait of Hormuz—a critical chokepoint for global oil shipments—contributed to the temporary price spike. However, analysts like Henning Gloystein from Eurasia Group have downplayed the likelihood of a broader conflict, suggesting that the risks of supply disruptions remain low.
Despite the current price decline, some analysts, including Rob Ginsberg of Wolfe Research, believe U.S. crude could rise above $84 per barrel, potentially reaching the mid-to-high $90s if it breaks through key resistance levels.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/08/13/crude-oil-prices-today.html
