WionDrive News Desk 
Oil prices declined on Tuesday, breaking a five-day streak of gains as market attention shifted back to demand concerns. The drop followed a reduction in the 2024 global demand forecast by OPEC on Monday, which was driven by weaker-than-expected demand growth in China. Global benchmark Brent crude futures fell by 78 cents, or 0.95%, to USD 81.52 a barrel by 0330 GMT. US West Texas Intermediate (WTI) crude futures also dipped, down 73 cents, or 0.91%, to USD 79.33 a barrel. This decrease follows significant gains on Monday, when Brent had surged over 3% and WTI had climbed more than 4%.
The cut to OPEC’s 2024 demand forecast was the first adjustment since July 2023 and reflects the challenges facing the OPEC+ group as it prepares to increase production from October. The revised forecast highlights concerns over China’s economic performance, particularly due to lower diesel consumption and ongoing issues in the property sector.
“Demand concerns for crude oil are resurfacing,” said Yeap Jun Rong, market strategist at IG. “Market reservations are growing ahead of upcoming US inflation data. Any sign of higher economic risks could further impact oil prices, especially with OPEC+ poised to scale back production cuts and potentially loosen the oil market.”
Geopolitical tensions are also influencing market sentiment. The escalating conflict in the Middle East has raised concerns about possible significant attacks by Iran or its proxies. White House national security spokesperson John Kirby indicated that such attacks could occur soon, potentially disrupting global crude supplies and driving prices higher. Analysts warn that a significant attack could prompt the US to impose embargoes on Iranian crude exports, affecting up to 1.5 million barrels per day.
Investors are also watching closely for Wednesday’s US consumer price index (CPI) report, which will provide a critical gauge of inflation. Concerns about a weak CPI could heighten fears of an economic slowdown. Money markets are predicting potential interest rate cuts by the Federal Reserve, with expectations of a 25- or 50-basis-point reduction in September and a total easing of 100 basis points by the end of 2024. Rate cuts typically stimulate economic activity, which could increase oil demand.
