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WTI Faces the 200 Daily SMA As OPEC Cuts 2025 Oil Forecast

Crude Oil has been climbing $6 in four days, but buyers are facing the 200 daily SMA while OPEC cut Oil demand forecasts for 2025 and 2025

Skerdian Meta•Monday, August 12, 2024•2 min read
WTI crude Oil daily chart

Last week, crude oil experienced a 2.8% increase after having declined over the previous four weeks due to concerns about slowing economic growth in China and growing fears of a recession in both the US and China, the two largest oil importers globally. U.S. economic data began to show signs of weakness, and the employment report further fueled worries that the U.S. economy might slow down more than anticipated, raising the specter of a potential recession and contributing to the decline in oil prices.

Oil Daily Chart – Stochastic Is Already Overbought

On Monday, WTI crude dipped below its lowest level of the year amid a broader financial markets meltdown. However, prices found some support as rising tensions in the Middle East sparked fears of potential disruptions in oil production.

Oil Production Increases Amid Concerns of Global Crude Overproduction

Despite the recent price recovery, oil production is ramping up, raising concerns about the potential development of a global crude glut. Some of the largest U.S. oil refiners, including Marathon Petroleum Corp., PBF Energy Inc., Phillips 66, and Valero Energy Corp., are expected to reduce operations at their facilities this quarter, cutting oil processing to its lowest levels in several years. These four companies alone account for about 40% of America’s gasoline and diesel production capacity.

Even with new refineries coming online, global crude supply is expected to continue rising through the end of the year. Global net capacity is forecasted to increase by approximately 5 million barrels per day until 2030. Additionally, The Organization of the Petroleum Exporting Countries (OPEC) released its latest monthly report on Monday, August 12, providing further insights into the current state of the oil market.

OPEC Cuts 2024 Oil Demand Growth Forecast Amid Softer China Outlook

  • New 2024 forecast: 2.11 million bpd (down from 2.25 million bpd).
  • 2025 oil demand growth forecast reduced to 1.78 million bpd (previously 1.85 million bpd)

OPEC has revised its 2024 global oil demand growth forecast downward, now expecting an increase of 2.11 million barrels per day (bpd), down from the previously estimated 2.25 million bpd. Looking ahead to 2025, the growth forecast has also been adjusted slightly lower to 1.78 million bpd from 1.85 million bpd.

Impact of China’s Softer Oil Demand Expectations

OPEC attributed these adjustments primarily to weakening expectations for China’s oil demand. Despite this, the organization remains optimistic about fuel demand, projecting it to stay “solid” due to robust road and air mobility, even after a slow start to the summer driving season.

US WTI Crude Oil Live Chart

WTI
ABOUT THE AUTHOR See More
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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