Oil Prices Slightly Lower as Investors Weigh Demand Concerns Amid Global Worries
Oil prices settled marginally lower on Monday as investors considered the outlook for oil demand amidst global demand concerns.
At 14:30 ET (18:30 GMT), Brent oil futures decreased by 0.2%, settling at $82.44 per barrel, while West Texas Intermediate (WTI) crude futures dropped by 0.3% to $78.41 per barrel.
Demand Concerns Persist as China Cuts Interest Rates to Boost Its Economy
Fears regarding slowing global growth and its impact on oil demand remained prominent after China, the world’s largest oil importer, unexpectedly lowered its benchmark loan prime rates earlier on Monday. This move aims to stimulate economic growth.
This rate cut follows last week’s data showing that China’s economy grew less than anticipated in the second quarter, raising concerns about a potential slowdown in the country’s demand for crude oil.
Beijing has committed to implementing more stimulus measures to support growth, with Monday’s rate cuts being part of these efforts. However, China’s loan prime rate is already at record lows, as the country has significantly loosened its monetary policy over the past two years to bolster growth.
These demand worries are emerging as some Wall Street analysts warn of a potential supply surplus next year.
Oil Market to Face Surplus Next Year, According to Morgan Stanley
Morgan Stanley predicts that the crude oil market, currently experiencing tight conditions, will likely face a surplus next year, with Brent prices expected to fall into the mid-to-high $70s range.
The bank noted that the tight market conditions will persist for most of the third quarter. However, equilibrium is anticipated by the fourth quarter “when seasonal demand tailwinds diminish and both OPEC and non-OPEC supply start to grow again.”
Morgan Stanley projects that OPEC and non-OPEC supply will increase by about 2.5 million barrels per day in 2025, outpacing demand growth.
Refinery runs are expected to peak in August this year and are unlikely to reach that level again until July 2025, according to the bank.
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