Oil Prices Expected to Remain Steady as China Demand Concerns Counterbalance Middle East Risks, According to Reuters

By Rahul Paswan and Kavya Balaraman

Oil prices are expected to remain relatively stable in the latter half of 2024, as concerns regarding demand from China and the likelihood of increased supply from major producers offset the impact of geopolitical tensions, according to a recent poll conducted by Reuters.

The survey, which included 44 analysts and economists over the past two weeks, predicts that the global benchmark price will average $83.93 per barrel in 2024, nearly matching the previous month’s consensus of $84.01. The anticipated average price for Brent crude is slightly revised to $79.72 from the previous forecast of $79.56 in May.

To date, Brent crude futures have averaged $83.4 in 2024, following temporary surges up to $92.18, primarily due to supply concerns linked to ongoing conflicts in the Middle East.

Analyst Norbert Rücker from Julius Baer commented, “Beyond the noise, oil prices appear to be stuck in a sideways trend,” noting that supply and demand dynamics are offering little direction, with storage levels remaining consistent with seasonal averages.

Despite this outlook, some analysts believe that prices could rise to $90 or higher, influenced by several factors such as summer consumption patterns, geopolitical developments in the Middle East, and production adjustments from the Organization of the Petroleum Exporting Countries (OPEC).

Expectations for oil demand growth in 2024 range between 0.99 and 1.4 million barrels per day, which slightly surpasses the International Energy Agency’s forecast of 0.96 million barrels per day.

On the supply side, many analysts recognize an increase in crude production from non-OPEC countries. William Weatherburn from Capital Economics noted that if OPEC+ proceeds with its plan to gradually reverse current production cuts starting in October, the market may see a slight surplus by the end of 2025.

Earlier this month, OPEC and its allies, led by Russia, decided to embark on a slow unwinding of 2.2 million barrels per day in output cuts over the course of a year, while also extending additional cuts of 3.66 million barrels per day until the end of 2025.