Oil Prices Rise 1% Brushing Off Bleak Global Demand Outlook for 2024

Oil is commonly regarded as the most volatile of all commodities due to multiple factors that impact its price globally, both implicitly and explicitly.

Crude oil futures surged, brushing off previous shortfalls amidst concerns over the bleak global demand forecasts for 2024.

West Texas Intermediate (WTI) gained $1.39 for March, ending at $78.03 per barrel, just as April’s Brent contract closed at $82.86 for each barrel, marking an increase of $1.26.

The weakening dollar lent support to oil prices as January US retail sales missed projections, Phil Flynn, Price Futures Group analyst, told CNBC.

At the outset of the trading session, futures slid about 1 percent after the International Energy Agency (IEA) revised its demand growth estimate to 1.2 million barrels per day (bpd) for 2024, reflecting a significant drop from the 2.3 million bpd growth last year.

Meanwhile, supply is forecast to outpace demand and climb by 1.7 million per barrel this year, mainly due to production hikes in the US, Brazil, Canada, and increased output in Guyana, the IEA noted.

“The expansive post-pandemic growth phase in global oil demand has largely run its course,” according to IEA’s February oil market report on Thursday.

According to the Organization of Petroleum Exporting Countries' (OPEC) projections, the oil market is set to tighten considerably this year, driven by a demand surge of 2.2 million bpd, exceeding the daily production growth of 1.2 million barrels outside the cartel.

“IEA and OPEC are engaged in a battle of the experts, but the market always gives more credence to OPEC since this is the group that actually produces and trades oil, and therefore has better market insight,” Manish Raj, Velandera Energy Partners’ managing director told CNBC.

Factors Influencing Global Oil Prices

Oil is frequently regarded as the most fluctuating of commodities. Several factors impact oil prices worldwide, directly and indirectly:

How Does Oil Prices Affect Consumers?

Crude oil is one of the most essentially traded commodities worldwide, with over 4,000 byproducts; its impact is far-reaching for the economy and other aspects of human endeavor, according to a media report. An oil price upswing pushes inflation levels higher, impacting household’s purchasing power, transportation fares, prices of goods, and energy prices.