Oil Price Outlook for 2024

By Anushree Ashish Mukherjee

(Reuters) – Analysts have lowered their 2024 oil price outlook due to weak fuel demand from leading importer China and rising inventory levels as Saudi Arabia and OPEC+ allies prepare to ease some output cuts from October, a Reuters poll found.

The poll of 37 analysts and economists surveyed by Reuters in the last two weeks forecast Brent crude would average $82.86 per barrel in 2024, marking a fourth consecutive cut in estimates from $83.66 forecast in July.

The poll indicated U.S. crude would average $78.82 this year, slightly lower than last month’s estimate of $79.22.

“Despite heightened geopolitical tensions, oil prices have been trading below $90 per barrel so far this year, as weak crude intake from China and Europe has offset the bullish impact of still-curbed OPEC supplies,” said Florian Grunberger, senior analyst at data and analytics firm Kpler.

Analysts anticipate global oil demand growing by 1.0 to 1.3 million barrels per day (mbpd) in 2024, compared with the 1 and 1.5 mbpd growth forecast in the previous poll.

OPEC also cut its forecast for global oil demand growth in 2024, citing weaker than expected data for the first half of the year and lower expectations for demand from China.

“This slowdown in consumption has led to a rise in inventory stock in the U.S. which could further put downward pressure on prices,” noted Sehul Bhatt, Director-Research at CRISIL Market Intelligence and Analytics.

Conflicts are ongoing in the Middle East and between Russia and Ukraine, but analysts reported that the risk premium on oil has shrunk because there has been no material impact on oil flows.

However, a further widening of the Israel-Hamas conflict paired with sustained supply outages, including disruptions in Libya, could drive prices above $90 a barrel, suggested Kpler’s Grunberger.

“The floating storage has risen recently. Also, the announced production enhancement by the OPEC+ alliance is a burden on oil prices shoulder so far,” stated Thomas Wybierek, analyst at NORD Landbk.

The Organization of the Petroleum Exporting Countries and allies (OPEC+) earlier this month confirmed its plan to start unwinding the most recent layer of cuts of 2.2 million bpd from October, but reiterated that the increase in supply could be paused or reversed if needed.

“We still assume that OPEC will raise production in the fourth quarter as the market is potentially shifting from an equilibrium where OPEC supports spot balances and reduces volatility to a more long-run equilibrium focused on strategically disciplining non-OPEC supply and supporting cohesion,” Goldman Sachs noted this week.