Oil futures paused their four-day rally as concerns about demand resurfaced following OPEC’s downward revision of its 2024 demand growth forecast.
This adjustment was influenced by softer demand from China, where declining consumption and a struggling property market have dampened economic activity.
Moreover, the US Energy Information Administration (EIA) also reported a 1% increase in proved oil and gas reserves for public companies, which could alleviate the short-term supply constraints and temper the upward momentum in oil prices.
Despite that, downside potential in oil prices could be limited as geopolitical tensions persist, contributing to market uncertainty and supporting crude prices. Markets are on edge regarding potential confrontations in the Middle East that could disrupt oil supplies.
Furthermore, market participants await the US consumer price index report, which will shed light on inflation and influence expectations for Fed interest rate cuts. Anticipated rate cuts could support economic activity and oil demand, potentially providing a catalyst for higher crude prices.
