Investing.com — Oil prices fell sharply on Monday after OPEC cut its demand growth forecasts amid concerns about the health of China’s economy, the world’s largest importer of crude oil.
At 08:35 ET (12:35 GMT), the price was down 1.9% at $77.57 per barrel, while the stock was down 2% at $74.05 per barrel.
OPEC again cuts demand growth forecasts in 2024
The Organization of the Petroleum Exporting Countries on Monday lowered its forecast for global oil demand growth in 2024, the producer group’s third consecutive downgrade.
In its monthly report, published earlier Monday, OPEC said global oil demand will rise by 1.93 million barrels per day (bpd) in 2024, down from growth of 2.03 million barrels per day which she expected last month. China was responsible for most of the credit rating downgrade in 2024, when OPEC cut its Chinese growth forecast from 650,000 barrels per day to 580,000 barrels per day.
The group also lowered its estimate of global demand growth in 2025 from 1.74 million barrels per day to 1.64 million barrels per day.
Disinflation in China continues, fiscal stimulus is disappointing
Chinese figures released over the weekend showed an unexpected easing in September amid nearly two years of contraction.
The figures indicated a continued deflationary trend in the world’s largest oil importer, which bodes ill for demand.
Mediocre signals about plans for more stimulus also hurt sentiment. China’s Finance Ministry said this weekend it planned to implement more fiscal stimulus, but gave few clues on the timing or size of the measures.
This largely disappointed markets, as traders were already impatient with Beijing’s languid approach to providing more economic support.
China had announced a slew of monetary stimulus measures at the end of September to support the economy. But enthusiasm about these measures was also scarce.
China is a major point of contention for oil markets as the world’s largest oil importer struggles with persistent deflation and slowing economic growth.
Tensions in the Middle East persist
Crude oil prices were also hit by rumors of a possible ceasefire in the Middle East, after Lebanese Prime Minister Najib Mikati called for an immediate ceasefire between Israel and Hezbollah.
The conflict in the Middle East remained in the spotlight for the oil markets.
Concerns about an escalation of the conflict caused oil prices to experience two weeks of sharp increases. The aggression between Israel and Hezbollah showed little sign of easing, with the war between Israel and Hamas marking a year ago earlier in October.
Fears of an escalation of the conflict, especially if Israel attacks Iranian oil facilities, have been a major boost to crude prices in recent weeks as traders place a greater risk premium on oil.
(Ambar Warrick contributed to this article.)
