Investing.com — Oil prices fell in early U.S. trading Tuesday as new signs of weaker demand raised concerns about a potential supply glut, outweighing the potential impact of Tropical Storm Francine on U.S. oil production.
At 2:30 PM EST, crude futures were down 4.3% to $65.75 per barrel, while futures expiring in November were down 3.7% to $69.19 per barrel, while
OPEC cuts demand forecasts again
Producer group OPEC lowered the growth forecast for global oil demand for 2024 in its monthly report on Tuesday.
The oil cartel now expects global oil demand to rise by 2.03 million barrels per day (bpd) in 2024, down from the previous month’s forecast of 2.11 million barrels per day. It was the second month in a row with downward adjustments.
Most of the writedown came from China, where demand growth is now expected to reach 650,000 barrels per day in 2024, down from the previous estimate of 700,000 barrels per day, as economic problems in the second-largest economy continue in the world.
“China’s economic growth is still expected to remain well supported,” OPEC noted in its report, but added that real estate sector woes and increasing use of LNG trucks and electric vehicles will drive demand for diesel and gasoline could decrease.
The lowered outlook highlights the ongoing challenge for OPEC+, which includes the Organization of the Petroleum Exporting Countries and allies such as Russia, in managing the oil market. Recently, OPEC+ postponed plans to increase production after prices bottomed out in 2024.
Tropical Storm Francine will hit the Gulf of Mexico
Elsewhere, a slew of oil companies were seen halting production and refining operations in the Gulf of Mexico as Tropical Storm Francine made its way towards the central US.
The storm is expected to potentially develop into a hurricane before making landfall and is expected to batter the coasts of Texas and Louisiana this week with heavy rain and gale-force winds.
The storm could potentially cause long-lasting disruptions in the energy-rich Gulf of Mexico, reducing crude supplies in North America and tightening the outlook for oil markets in the near term.
New US crude inventory data to follow
Fresh domestic crude inventory data will come into focus later in the session when the weekly petroleum report is released.
Economists expect the API report for the week ending September 6 to show a crude oil inventory of 700,000 barrels.
The report comes just one day ahead of the Energy Information Administration’s official data.
(Scott Kanowsky and Ambar Warrick contributed to this report.)
