Oil prices close at lowest level since December 2021 as OPEC cuts forecast

Crude oil futures on Tuesday closed at the lowest level since December 2021, as the market sell-off gained speed after OPEC lowered its demand forecast for the second time in two months.

“Crude Oil demand destruction one two punch from China and OPEC delivered the knockout blow today,” Bob Yawger, executive director of energy futures at Mizuho Securities, told clients in an afternoon note.

“Incredibly, the market is getting beat down while a tropical storm/hurricane churns up the US Gulf of Mexico oil patch,” Yawger wrote.

Here are Tuesday’s closing energy prices:

• West Texas Intermediate October contract: $65.75 per barrel, down $2.96, or 4.3%. Year to date, U.S. crude oil has declined 8.2%.
• Brent November contract: $69.19 per barrel, down $2.65, or 3.69%. Year to date, the global benchmark has pulled back 10.2%.
• RBOB Gasoline October contract: $1.87 per gallon, down 5 cents, or 2.6%. Year to date, gasoline has fallen 11.1%.
• Natural Gas October contract: $2.23 per thousand cubic feet, up more than 6 cents, or 2.8%. Year to date, gas has shed 11.2%.

Futures turned bearish after recovering some lost ground Monday as Tropical Storm Francine threatens oil and gas production as well as refining operations on the Gulf Coast.

OPEC now expects demand to grow by about 2 million barrels per day in 2024, some 80,000 bpd slower than its previous forecast. The group of oil producers sees demand growth of 1.7 million bpd next year, about 40,000 bpd lower than originally anticipated.

OPEC had cut its demand outlook in August due to softening consumption in China, the world’s largest crude importer.

Worries about softening demand in China as electric vehicle sales surge have loomed over the oil market for months now. OPEC+ is also expected to increase production in December, with Morgan Stanley and other market analysts forecasting a surplus for 2025.

China’s crude imports declined about 3% in 2024, according to Yawger. “China Crude oil imports have been lower on a annual basis only three times since 2006, and one of those year was Covid 2020,” he said.