Oil Prices Fall as Demand Declines, Barclays Cuts Forecast

On Monday, oil prices declined as demand slowed, leading Barclays to trim its Brent petroleum price estimate for next year.

The US West Texas Intermediate (WTI) crude oil December futures fell by -0.93% from Friday to $76.45 per barrel on November 13. Analysts anticipate an additional drop to $76.41 a barrel by the end of the day’s market session.

Similarly, Brent black gold futures shed -0.90% to $80.70 bbl after closing last week at $81.43 bbl. The energy commodities reversed Friday’s nearly 2.00% gains over renewed worries about shrinking demand in the US and China.

Last week, the American Petroleum Institute (API) revised its 2023 demand forecast to a contraction of 300,000.00 barrels per day (bpd). At the same time, fears of the Israel-Hamas conflict escalating to involve surrounding territories have receded.

Industry watchers predict China’s oil imports to plummet after its weak economic reports. Based on Thursday’s data, the country’s annualized consumer price index (CPI) retreated by -0.20% in October after stalling in the previous month.

Chinese consumer prices also slumped by -0.10% month-over-month, following a 0.20% slide in September. During the period, contraction China’s producer prices index (PPI) accelerated to -2.60% in October from the prior month’s -2.50%.

On the supply end, US energy producers reduced the number of operating oil rigs to 618, according to Baker Hughes. Such a low level of utilization has not been seen since February 2022.

Barclays Slashes 2024 Brent Oil Price Projection

Analysts at Barclays lowered their 2024 price prediction for Brent crude oil futures by -4.12% to $93.00 bbl. They maintained their view that the current crash in petroleum prices is likely temporary, and the commodity will eventually bounce back.

The team cited pressure from waning demand in the US and China and support from the Middle Eastern conflict. Additionally, Saudi Arabia and Russia reiterated continued voluntary oil production cuts for the remainder of 2023.

The strength of the global economy may also be weaker than previously estimated. Several critical global economies have reported below the expected growth or above the estimated decline.

Barclays analysts have expressed concern that the recent crude selloff might have been exaggerated.