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Oil futures are attempting to stabilize, but the market is still under stress due to the situation in the Middle East and a weakening demand outlook.
Recent price drops were caused by lower demand forecasts and reports indicating that Israel would not strike Iranian nuclear and oil facilities, easing concerns about supply disruptions. However, tensions remain high and could see a return of oil prices to the upside in case of escalations.
On the demand side, market participants are looking for clearer signals regarding China’s fiscal policy, as uncertainties about its economic recovery affect oil demand expectations. Both the Organization of the Petroleum Exporting Countries and the International Energy Agency have lowered their forecasts for global oil demand growth in 2024, mainly due to expected changes in China’s consumption.
Ongoing geopolitical tensions, combined with weak demand projections, create an uncertain outlook for global crude prices in the near term. Market participants are likely to remain cautious, which could lead to further volatility. The market awaits U.S. oil inventory data for more insight in US demand.
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