Oil forecasts cut for 5th straight month on demand, OPEC uncertainty: Reuters poll By Reuters

By Sherin Elizabeth Varghese

(Reuters) – Analysts cut their 2024 oil price forecasts for a fifth straight month, citing weaker demand and uncertainty over OPEC plans, with prices expected to remain under pressure despite geopolitical risks, a survey found on Monday Reuters.

A Reuters poll of 41 analysts and economists in the past two weeks projected that it would average $81.52 a barrel in 2024, the lowest projection in a February survey and down from $82.86 expected in August.

prices are expected to average $77.64, below last month’s forecast of $78.82.

“The recent weakness in oil prices is partly attributable to market concerns about how and when OPEC will return barrels to the market, along with weaker indicators of Chinese demand,” said Roger Read, senior energy analyst at Wells Fargo.

Global oil demand is expected to grow by 0.9 to 1.2 million barrels per day (mbpd) in 2024, down from previous estimates of 1 to 1.3 mbpd, according to the survey.

Both OPEC and the International Energy Agency (IEA) cut their forecasts, citing slower Chinese demand, with OPEC cutting its oil demand growth outlook for 2024 for the second time.

“Slower economic growth in major economies such as China and Europe coupled with expectations of weak demand are pushing prices down despite geopolitical uncertainty,” said Sehul Bhatt, research director at CRISIL Market Intelligence and Analytics.

Most analysts believe the risk premium related to the oil price war has fallen because of abundant supply, but some analysts said the premium could rebound if tensions rise, particularly in the Middle East.

Florian Grunberger, senior analyst at data and analytics firm Kpler, said if hopes for a ceasefire (in Gaza) remain unfulfilled, a higher risk premium for oil could return.

Oil prices surged above $90 a barrel in April amid tensions in the Middle East and supply cuts by OPEC+. But they abruptly reversed course, falling below $70/bbl this month as weak demand trends led to a supply glut. (OR)

OPEC+ is still expected to go ahead with a planned output increase in December, but output cuts are needed first to address overproduction by some members.

“We expect OPEC+ to continue with a production increase in December,” said Mike Haigh, commodities strategist at Societe Generale ( OTC: ).

“However, given the disappointing demand outlook and rising OECD trade inventories, full cuts cannot be fully reversed as prices will begin to deteriorate.”

OPEC+ is currently cutting production by 5.86 million bpd, or about 5.7% of global demand. Earlier this month, the group delayed its plan to raise output after oil prices hit a nine-month low.