The US Energy Information Administration (EIA) has cut its crude oil price expectations for 2024 and 2025 even while raising its demand forecasts. The EIA now expects Brent spot price to average $84.44 per barrel in 2024 and $85.71 per barrel in 2025, down from its earlier projection of $86.37 per barrel in 2024 and $88.38 per barrel in 2025.
The EIA expects US oil demand to reach 20.5 million bpd in 2024, 100,000 bpd more than its July forecast while leaving its global oil demand expectations unchanged at 102.9 million bpd. However, the 2025 oil consumption forecast has been revised slightly downward from 104.7 million bpd to 104.5 million bpd, representing a demand increase of 1.1 million bpd in 2024 and 1.6 million bpd in 2025.
The Revised Outlook
In its August short-term energy outlook (STEO), the EIA also provided a quarterly breakdown of Brent spot price forecasts with an average of $84.06 per barrel for Q3 2024, $85.97 per barrel for Q4, $88.66 per barrel for Q1 2025, $86.33 per barrel for Q2, $85 per barrel for Q3 and $83 per barrel for Q4.
The US agency has also cut its outlook for West Texas Intermediate (WTI) crude prices for 2024 to $80.21 per barrel, 2.2% below the former forecast of $82.03 per barrel. The cut followed sell-offs sparked by concerns regarding the American economy.
The EIA has also lowered its US oil production forecasts, now expecting production to grow by 300,000 bpd in 2024 to reach a record 13.23 million bpd, slightly below its earlier expectations of an increase of 320,000 bpd for the year.
Recent economic data from China has raised concerns regarding the economy, with the numbers hitting lows last seen in 2009. In addition, the downwardly revised US job numbers also aligned with the 2009 levels. Given that the US is the world’s largest oil consumer and China is the biggest oil importer, potential weakness in these economies indicates that oil demand growth might come in at the lower end of the forecasts.
This led to oil price declines, with Brent crude down 0.78% YTD and 9.66% over the past 12 months, as of August 22, 2024. The spot price decline came in despite the significant decrease in crude inventories, which fell to 4.6 million barrels, much below the expected drop of 2 million barrels, reflecting the influence of the global economic outlook on oil prices.
Meanwhile, OPEC+ is expected to lift some of its oil production cuts in October, which could put further pressure on oil prices. However, if the oil price weakness persists, OPEC+ might need to revise its plans to increase supply gradually from October.
How Brokers Can Support Oil Traders
The oil markets will remain volatile till there is greater clarity on the global economy and oil supply and demand outlook. This means more opportunity for traders, but those new to trading commodities might have difficulty understanding the data and will steer clear of adding it to their portfolios.
Brokers can encourage traders by giving them access to real-time news, expert analysis and tools to identify viable trading setups. Brokers that empower traders to make well-informed decisions will not only build greater engagement and loyalty but also drive more activity on their trading platforms.
Acuity’s Research Terminal offers a comprehensive suite of research and analysis tools for traders. Powered by AI, the widgets on this terminal offer accurate actionable insights, customised to each trader’s preferred markets. Some of the powerful tools that can support oil traders on the Research Terminal include:
- AnalysisIQ: Offer traders FCA-compliant transparent trading strategies, clear calls to action and timely market updates from a team of skilled technical analysts. Acuity combines the knowledge of experienced analysts with advanced AI technology to provide thorough market analysis and resilient risk/reward trade ideas for traders of all experience levels.
- AssetIQ: Power trading decisions with in-depth analysis of an extensive range of assets. Each asset analysis is accompanied by an Opportunity Score, derived from traditional and alternative data sources to help traders cut through infobesity and gain actionable insights.
- Economic Calendar: This indispensable tool for commodities traders offers advanced filtering capabilities to support your traders in identifying key economic indicators and market-moving events that will impact their portfolios.
- NewsIQ: This is a vital tool that brings real-time news directly from Dow Jones Newswires. Traders can use this news analysis widget to identify actionable opportunities, cutting through the information overload online to find the most significant market news for their needs.
- Dynamic Emails: Deliver personalised recommendations, instant updates and real-time market insights directly to trader inboxes, exactly when they need it. With insights tailored to each trader, you can maximise client engagement, loyalty, and lasting relationships.
With data and analysis presented in easily digestible visual charts, traders can make timely decisions to capitalise on crude oil price moves. The Research Terminals and individual widgets can be easily integrated into the broker’s trading platform, allowing traders easy access to valuable market information.
Schedule a personalised demo to learn how your brokerage can support traders with powerful analytics from Acuity’s experts.
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