Oil prices fall as markets refocus on demand concerns By Reuters

By Arathy Somasekhar

(Reuters) – Oil prices fell on Tuesday, snapping a five-day winning streak, as markets refocused on demand concerns after OPEC on Monday cut its forecast for demand growth in 2024 amid weaker expectations from China.

Global benchmark futures were down 41 cents, or 0.5 percent, at $81.89 a barrel by 0005 GMT. U.S. West Texas Intermediate crude futures settled at $79.63 a barrel, down 43 cents, or 0.5 percent.

Brent had gained more than 3% on Monday, while futures were up more than 4%.

The Organization of the Petroleum Exporting Countries’ (OPEC) cut in global demand for 2024 highlighted the dilemma facing the wider OPEC+ group in raising output from October.

The cut in OPEC’s 2024 forecast was the first since it was made in July 2023 and comes after growing signals that Chinese demand beat expectations due to falling diesel consumption and as a housing crisis hampers the world’s second-largest economy.

Meanwhile, conflict in the Middle East has escalated, with the US bracing for what could be significant attacks by Iran or its proxies in the region as soon as this week, a White House National Security spokesman said on Monday. John Kirby (NYSE:).

Any attack could tighten access to global crude supplies and push up prices. An attack could also prompt the United States to impose embargoes on Iranian crude exports, which could affect 1.5 million barrels a day of supply, analysts said.

Markets are also gearing up for Wednesday’s US consumer price index report, which will provide a crucial reading on inflation, with investors now worried that too low a CPI number will fuel fears of a slowdown.

Money markets were even betting on a 25- or 50-basis-point cut in US interest rates in September, expecting a full 100bps easing by the end of 2024, CME’s FedWatch tool showed.

Rate cuts tend to increase economic activity, which increases the use of energy sources such as oil.

The US dollar rose marginally on Tuesday after two days of losses. A stronger greenback helps demand as oil becomes more expensive for foreign buyers.