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OIL: Crude Falls Sharply On Global Demand Worries & Soft China Imports

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Oil prices are now down almost 10% in September to date following a sharp drop on Tuesday as markets reacted to OPEC’s moderate downward revision to its demand forecasts and soft China import data. The move was exacerbated by technical selling. WTI fell 3.5% to $66.31/bbl, while Brent was down 3% to $69.71 after a low of $68.68. The USD index rose 0.1%. 

  • OPEC revised down its global demand growth forecast to 2.03mbd from 2.11mbd and 2025 by 40kbd to 1.74mbd, while non-OPEC supply growth expectations were unchanged at 1.2mbd and 1.1mbd respectively. The moderate downward revisions to demand don’t seem to warrant the 2-month delay in supply increases and OPEC’s forecasts continue to point to a market deficit. The less optimistic IEA reports Thursday.
  • The market ignored the US EIA’s upward revision to its 2024 global demand growth forecast by 200kbd, while reducing supply by 200kbd due to changes in OPEC’s plans. Thus it now expects a global inventory drawdown of 1mbd in Q1 2025 after 900kbd in Q3 2024. It projects stock builds from mid-2025. As a result it expects crude prices to rise again with Brent at $81.64 in Q4 and $84.09 in 2025, but both have been revised lower.
  • OPEC’s output in August fell 197kbd with Libya down 219kbd to 956kbd driven by a political dispute. Russia continued to export above its target.
  • Bloomberg reported that US crude inventories fell 2.79mn barrels week, according to people familiar with the API data. Gasoline fell 513k while distillate rose 191k. The official EIA data is today.
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Oil prices are now down almost 10% in September to date following a sharp drop on Tuesday as markets reacted to OPEC’s moderate downward revision to its demand forecasts and soft China import data. The move was exacerbated by technical selling. WTI fell 3.5% to $66.31/bbl, while Brent was down 3% to $69.71 after a low of $68.68. The USD index rose 0.1%. 

  • OPEC revised down its global demand growth forecast to 2.03mbd from 2.11mbd and 2025 by 40kbd to 1.74mbd, while non-OPEC supply growth expectations were unchanged at 1.2mbd and 1.1mbd respectively. The moderate downward revisions to demand don’t seem to warrant the 2-month delay in supply increases and OPEC’s forecasts continue to point to a market deficit. The less optimistic IEA reports Thursday.
  • The market ignored the US EIA’s upward revision to its 2024 global demand growth forecast by 200kbd, while reducing supply by 200kbd due to changes in OPEC’s plans. Thus it now expects a global inventory drawdown of 1mbd in Q1 2025 after 900kbd in Q3 2024. It projects stock builds from mid-2025. As a result it expects crude prices to rise again with Brent at $81.64 in Q4 and $84.09 in 2025, but both have been revised lower.
  • OPEC’s output in August fell 197kbd with Libya down 219kbd to 956kbd driven by a political dispute. Russia continued to export above its target.
  • Bloomberg reported that US crude inventories fell 2.79mn barrels week, according to people familiar with the API data. Gasoline fell 513k while distillate rose 191k. The official EIA data is today.