In recent weeks, crude oil prices have been dropping sharply. The global market for raw materials showed a lot of red, indicating declining values. The main cause of this downward trend has been weaker demand in China, alongside cooling tensions in the Middle East. In this article, we will look at why oil prices are falling and make a simple oil price forecast for the next three months.
Current Situation of Oil Prices
As of now, oil prices have reached their lowest levels since early October. For example, West Texas Intermediate (WTI) crude oil for November delivery fell by 8.39%, landing at $68.69 per barrel【1】. Meanwhile, Brent crude oil for December lost 7.57%, nearing $73 per barrel【2】. These decreases happened as overall energy markets experienced a significant downturn. The MXV-Index, which tracks global raw material prices, dropped by over 3.5%, reflecting a broader trend across commodities (MVX 2024).
Key Reasons Behind the Decline
The main reasons why oil prices have fallen include lower demand in China and easing tensions in the Middle East. China, the world’s largest oil importer, has seen a noticeable drop in consumption. In September, China imported 45.5 million tons of crude oil, which was 7.4% less than the same time last year【3】. This marked the fifth month in a row where China’s oil imports were lower than they had been a year earlier (MVX 2024).
Another reason for the drop in oil prices is that worries about conflict in the Middle East have reduced【4】. When tensions in the region are high, oil prices tend to go up because people worry that supply will be disrupted. However, recent calm in the area has taken away some of this pressure on prices, leading to further declines.
Future Oil Price Forecast
Looking ahead to the next three months, there are some important things to watch that could influence the oil price forecast.
- China’s Economic Situation: Since China’s oil consumption is a major factor in global demand, any changes in the country’s economy could impact prices. The Chinese government is trying to boost the economy with new measures, which could lead to higher demand for oil. If this happens, it may help to stabilize or even push oil prices higher again.
- Middle East Tensions: Although the situation in the Middle East has been relatively calm recently, any sudden changes could quickly affect oil prices. This region is home to some of the world’s largest oil producers, and any disruptions could lead to a spike in prices. For now, though, experts predict that tensions are unlikely to escalate in the immediate future.
- OPEC’s Production Decisions: The Organization of the Petroleum Exporting Countries (OPEC) recently lowered its global oil demand growth forecast for 2024 from 2.03 million barrels per day to 1.93 million barrels per day【5】. This is the third time OPEC has made a downward adjustment to its forecast this year. OPEC’s decisions on whether to reduce or increase oil production will also play a significant role in shaping future price trends (MVX 2024).
Conclusion
In conclusion, oil prices have recently hit their lowest levels since early October, mainly due to weak demand in China and calming tensions in the Middle East. The next three months will be shaped by changes in China’s economy, stability in the Middle East, and OPEC’s production choices. As these factors evolve, they will guide the future direction of oil prices. However, based on the current situation, prices are expected to remain relatively stable, with slight fluctuations depending on market conditions.
Julia Nguyen
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