Global crude oil benchmarks have faced significant declines this week, with Brent falling 7.2% and the U.S. benchmark dropping 5.4%, marking their worst performances since October 2023 and early May, respectively. The steep sell-off occurred even after OPEC+ delayed its planned production hike of 180,000 barrels per day until December. This delay, however, failed to ease concerns that supply would soon outstrip demand.
U.S. crude oil falls more than 4%, closes at lowest level since December to erase 2024 gains https://t.co/I71zbdhcW1
— Barbarian Capital (@BarbarianCap) September 4, 2024
The postponed production increase will eventually bring 2.2 million barrels per day back to the market by the end of next year. Adding to the pressure on oil prices is the slowing demand from China, the world’s largest crude importer, which has been rapidly transitioning to electric vehicles.
Here are Friday’s energy price updates: West Texas Intermediate for the October contract closed at $69.43 per barrel, up 0.4%, though it remains down 5.5% year-to-date. The Brent November contract reached $72.97 per barrel, rising 0.39% but still down 7.3% for the year. RBOB Gasoline for October settled at $1.94 per gallon, up 1.04%, though it has fallen 7.4% year-to-date. Natural Gas for October remained little changed at $2.24 per thousand cubic feet, down 10.5% year-to-date.
US crude oil falls below $69 to hit $68.88 and Brent crude at $72.40 pic.twitter.com/1F8HJu2Teg
— Shamsul Islam Khan (@shamsulislamkha) September 4, 2024
Bank of America recently adjusted its oil price forecast for 2025, lowering its projection for Brent to $75 per barrel, down from $80, and the U.S. benchmark to $71, down from $75. Citi also predicted that Brent prices could average in the $60 range next year due to a substantial surplus expected in the market.
key Points:
i. Brent and U.S. crude benchmarks saw sharp weekly declines.
ii. OPEC+ postponed a production hike until December, but concerns about supply and demand persist.
iii. China’s shift towards electric vehicles is contributing to lower oil demand.
iv. Oil price forecasts for 2025 have been lowered by both Bank of America and Citi.
v. Friday’s energy prices showed small gains but are down significantly year-to-date.
James Kravitz – Reprinted with permission of Whatfinger News
