Oil prices dip after OPEC+ cuts 2024 demand forecast

Oil prices (BZ=F, CL=F) are facing downward pressure on Tuesday as investors react to OPEC's reduced 2024 demand forecast. Looking ahead to 2024's fourth quarter for the energy market, Yahoo Finance markets and data editor Jared Blikre analyzes how OPEC's oil output production decisions will impact global crude oil prices.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Angel Smith

Video transcript

Oil prices easing as traders, we opec's cut to its 2024 oil demand forecast.

You're looking at a drop for crude of just about nearly 1.5% Brent off by just about the same.

Meanwhile, former President Donald Trump calling for lower energy prices and more oil digging here in the US.

During an interview on X.

Let's take a listen, the cost of heating your house and cooling your house that has to come down it, it's gone up 100%.

100 and 5200% and that has to come down when that comes down and we're gonna drill baby drill drill, baby drill something we've heard from former President Trump time and time again.

All right, for more on the oil markets and some of the action that we're seeing.

Yahoo finance is Jared bicker.

Jared.

Guess what drill baby drill means?

It means lower prices if that happens.

And the OPEC plus is considering something very similar and that has to do with that report.

You were talking about where they lowered their demand.

Uh Expert, excuse me, they lowered their demand expectations for 2024 but all the focus is really on what OPEC plus might do in October December.

That is the fourth quarter of this year.

They may be increasing their output by 543,000 barrels per day.

They are currently holding back millions of barrels per day.

So this would only be a modest increase.

Nevertheless, they might be hesitant to do that because they are consuming.

They are afraid that the world might need a little bit less oil than expected.

Notwithstanding that demand during the summer, here has been very high.

And in fact, the global stockpiles decline by 26.2 million barrels in June.

So currently demand is high, but they're seeing that kind of wane in the future.

And if they were, if OPEC plus were to cut those 543,000 barrels per day in the fourth quarter, that would lead to an accumulation of 860,000 barrels per day next year.

So let me tell you what all of this might do to the price.

What we're looking at here is Brent crude oil.

This is the standard over in the Middle East.

This is the benchmark that they use they need.

And by they, I mean, the Middle East in general needs about $100 per barrel of Brent to break even on their finances.

Now, if they just arbitrarily start pumping more, that's going to send the price down.

And that's going to mean that they probably won't get as many government receipts if they do the opposite.

Well, price goes in the opposite direction, but it's all a very delicate balancing game.

And I think the big wild card here is President Trump, what would his energy policy be?

And I'll leave you with this note.

A lot of people said during the right ahead of the first Trump administration that energy price, traditional energy prices were going to soar clean energy would take a hit.

That was the opposite case.

And in fact, that was something that happened under Biden.

So for all the handicapping about what might happen with the election, everything people got it very wrong last time.

So take that with a grain of salt.

All right, Jared, thanks so much for giving us that broad overview there.

We really do appreciate it as always.