Oil prices ease on fears of higher output, sluggish demand
Adds details and quotes throughout, updates prices as of 0400 GMT
By Katya Golubkova and Trixie Yap
Nov 14 (Reuters) - Oil prices slipped in early trade on Thursday, reversing most of the previous session's gains, weighed down by worries of higher global production amid slow demand growth, with a firmer dollar exacerbating the declines.
Brent crude futures LCOc1 fell 35 cents, or 0.5%, to $71.93 a barrel by 0400 GMT. U.S. West Texas Intermediate crude (WTI) futures CLc1 declined 42 cents, or 0.6%, to $68.01.
"Oil is tackling the (earlier) weaker demand forecast narrative by OPEC, who deferred rolling back additional production for yet another month, fearing the adverse effect on prices," said Phillip Nova's senior market analyst Priyanka Sachdeva in an email.
On Tuesday, theOrganization of the Petroleum Exporting Countries cut its global oil demand growth forecast to 1.82 million bpd in 2024, down from 1.93 million bpd forecast last month, on weak demand in China, India and other regions, sending oil prices to their lowest in nearly two weeks.
Meanwhile, theU.S. Energy Information Administration has slightly raised its expectation of U.S. oil output to an average 13.23 million barrels per day this year, or 300,000 bpd higher than last year's record 12.93 million bpd, and up from 13.22 million bpd forecast earlier.
The agency also raised its global oil output forecast for 2024 to 102.6 million bpd, from its prior forecast of 102.5 million bpd. For next year, it expects world output of 104.7 million bpd, up from 104.5 million bpd previously.
The EIA's oil demand growth forecasts are weaker than OPEC's,at about 1 million bpd in 2024, although that is up from its prior forecast of about 900,000 bpd.
Market participants are now waiting for the International Energy Agency's oil market report, due later in the day, and the EIA's U.S. crude oil and product stockpile data for further trading cues.
Concerns about China's demand remains a key contributor to softening prices, analysts say.
"Despite various stimulus measures implemented by Chinese authorities, there has been little to no improvement in economic activity or sentiment within mainland China," said Phillip Nova's Sachdeva.
China continues to be the “sore joint” for oil demand and the primary reason why oil markets are bracing for an oversupply in 2025, she added.
Also weighing on prices, theU.S. dollar rose to near a seven-month high against major currencies on Wednesday after data showed U.S. inflation for October increased in line with expectations, suggesting the Federal Reserve will keep cutting rates.
"...The stronger USD is creating strong headwinds for commodities," ANZ Research said in a note.
A firmer dollar makes commodities priced in the greenback expensive for buyers using other currencies.
Reporting by Katya Golubkova; Editing by Himani Sarkar and Kim Coghill
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
