Oil prices fell in Asian trading on Tuesday, reversing last week’s rally, as a series of economic signals this week raised caution, while OPEC also cut its forecast for demand growth in 2024.
Prices rose sharply from their lowest levels in more than seven months as fears of an escalating conflict between Iran and Israel prompted traders to add a higher risk premium to crude. Media reports said an Iranian strike on Israel was likely this week.
But overall gains remained limited by ongoing concerns over demand, especially after weak economic data from China, the largest importer of gold, and with traders also concerned about a recession in the United States.
U.S. crude oil futures for October delivery fell 0.4% to $81.94 a barrel, while they were down 0.4% at $77.98 a barrel by 21:35 ET (01:35 GMT).
OPEC cuts oil demand forecast
OPEC said it expects oil demand to grow by 2.11 million barrels per day in 2024, down from a previous forecast of 2.25 million barrels per day.
In a monthly report released on Monday, the organization noted growing doubts about China as the country continues to struggle with its post-Covid economic recovery.
Expectations of lower demand have raised doubts about the feasibility of OPEC’s plans to begin phasing out production cuts.
The cut has heightened concerns about a slowdown in global oil demand this year, especially amid fears of a slowdown in demand in China, the world’s largest oil importer.
The cut in demand forecasts on Monday comes just months before the cartel meets to decide on the path of production in the coming months.
Economic data awaits more signals
Oil markets are also awaiting a series of key economic readings this week for further cues on growth and interest rates.
Inflation data is due on Wednesday and is widely expected to influence U.S. interest rate expectations. Traders are pricing in a 25-50 basis point rate cut by the Federal Reserve in September.
In addition to inflation data, data from the United States is due later in the week.
Readings from China are also due later this week and should provide further clues about the world’s largest importer of crude oil.