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- Oil prices remain near a two-week low as global economic uncertainty continues.
- A stronger U.S. dollar and China's stimulus plan disappointment also impact oil prices.
- OPEC faces challenges, with global demand growth estimates revised downward for 2024 and 2025.
NEW YORK — Oil prices held near a two-week low on Tuesday after dropping about 5% over the past two sessions as investors absorbed OPEC's latest downward revision for demand growth, a stronger U.S. dollar and disappointment over China's latest stimulus plan.
Brent futures were up 24 cents, or 0.3%, to $72.07 a barrel by 11:22 a.m. MST, while U.S. West Texas Intermediate crude rose 29 cents, or 0.4%, to $68.33, after both crude benchmarks settled at their lowest prices since Oct. 29 on Monday.
OPEC cut its forecast for global oil demand growth in 2024 and also lowered its projection for next year, marking the producer group's fourth consecutive downward revision, highlighting the challenges facing OPEC+, a group that includes the Organization of the Petroleum Exporting Countries and allies such as Russia, including their postponement of starting to raising output in December against a backdrop of falling prices.
OPEC said world oil demand would rise by 1.82 million barrels per day in 2024, down from growth forecast of 1.93 million barrels per day last month, while also cutting its 2025 global demand growth estimate to 1.54 million barrels per day from 1.64 million barrels per day.
"A normal tendency in crude following a sharp drop would be a recovery back to about the middle of the prior day's range within a couple of sessions," analysts at energy advisory firm Ritterbusch and Associates said in a note.
The group remains at the top of industry estimates and has a long way to go to match the International Energy Agency's far lower view, while their forecast on robust growth in China is "at odds with other forecasters, who have considerably reduced their end-2024 estimates on China's poor macroeconomic performance and disappointing fiscal stimulus," said Harry Tchilinguirian, head of research at Onyx Capital.
On Friday, Beijing unveiled a $1.4 trillion debt package to ease local government financing strains, though analysts said China's plan fell short of the amount needed to boost economic growth, especially as President-elect Donald Trump, who won the Nov. 5 U.S. presidential election, threatens more tariffs on Chinese goods.
"With China's demand remaining lackluster, supply-side tinkering by OPEC is not having the desired impact other than to maintain the Brent price floor at $70," said Gaurav Sharma, an independent oil analyst in London.
Dollar strength
Also weighing on oil prices, the U.S. dollar rose to a four-month high versus a basket of currencies as investors kept piling into trades seen benefiting from Trump's victory, with stronger greenback making oil more expensive in other countries, which can reduce demand.
In Germany, the biggest economy in Europe, investor morale clouded over this month, an economic research institute said, as Trump's election and the collapse of the German government unleashed added uncertainty over Germany's already ailing economy.
Protectionist policies from the incoming U.S. administration will hamper global growth and Europe must be better prepared than in 2018, European Central Bank policymakers warned.
In the Middle East, Yemen's Houthis, an Iran-backed militant group, said they had conducted two military operations against U.S. naval vessels in the Red Sea and Arabian Sea, continuing their attacks on international shipping which have occurred since last November in solidarity with the Palestinians in the war between Israel and Hamas in the Gaza Strip.
Iran, a member of OPEC, also continues to back several other groups, including Hamas in Gaza and Hezbollah in Lebanon, that are currently fighting Israel.
Contributing: Arunima Kumar, Colleen Howe and Emily Chow.
