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15/05/24
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Crude Prices Drop After IEA Monthly Report
On Wednesday, crude prices dropped and gave back earlier gains after the IEA reduced its forecast for this year’s demand growth.
Brent oil futures dropped 0.4% to $82.70 per barrel, and West Texas Intermediate crude futures fell 0.4% to $77.97 per barrel.
Earlier on Wednesday, the IEA reduced its forecast for oil demand growth this year, citing weak demand in developed OECD countries, especially in Europe.
In its monthly report, the organization reduced its growth outlook for the year by 140K barrels per day to 1.1M bpd and lifted its 2025 oil growth outlook slightly to 1.2M bpd.
According to the IEA, the lower 2024 oil demand forecast was due to weak economic growth, especially in Europe, where a lesser share of diesel cars was already reducing consumption.
The IEA said in combination with weak diesel deliveries in the U.S. at the beginning of the year, it was enough to push OECD oil demand in Q1 back into contraction.
Oil markets were also edgy after U.S. CPI data indicated that inflation was still higher than the Fed’s target, although there were signs of easing.
Traders are wary of persistent U.S. inflation, which is likely to lead to the Fed keeping interest rates high for longer. This scenario does not bode well for crude.
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