Oil Prices Struggle Near 3-Month Lows

Oil Prices Remain Under Pressure

Oil prices continue to struggle as they hover near three-month lows. Concerns over declining demand in the top oil-consuming countries, the United States and China, are weighing heavily on the market. Crude oil futures have dipped to their lowest levels since July 24, with U.S. crude oil stocks rising by almost 12 million barrels last week, according to market sources.

Challenges in the U.S. Oil Market

Crude oil production in the United States is expected to rise by slightly less than previously anticipated, while demand is projected to fall. The U.S. Energy Information Administration (EIA) has revised its forecasts, expecting a decline in total petroleum consumption by 300,000 barrels per day (bpd) this year, in contrast to its earlier forecast of a 100,000 bpd increase.

Global Supply and Demand Dynamics

Despite OPEC countries’ cumulative production cuts, seaborne net oil exports remain only 0.6 million bpd below April levels. This, coupled with concerns about weakening global demand, especially in China, has contributed to the ongoing challenges in the oil market.

Factors Affecting Oil Prices

Several factors are impacting oil prices, including an observed recovery in the U.S. dollar and doubts about the demand outlook in China. The combination of these factors has added pressure on oil prices, making it more expensive for holders of other currencies.

Positive Outlook Amid Challenges

Despite these challenges, OPEC remains optimistic about global economic growth driving fuel demand. Additionally, China’s central bank governor has expressed confidence in the country’s ability to achieve its annual gross domestic product growth target this year, providing a glimmer of hope amid the current economic uncertainties.