Investing.com – Oil prices fell on Tuesday, reversing last week’s rebound, as expectations for a series of economic clues this week prompted caution and OPEC lowered its forecast for demand growth in 2024.
It was down 0.9% at $79.36 a barrel by 09:20 ET (13:20 GMT), while crude oil due in October was down 0.9% at $81.54 a barrel.
Prices have rebounded sharply from more than seven-month lows as traders placed a higher risk premium on crude amid concerns about a worsening conflict between Iran and Israel.
But overall gains remain hampered by ongoing concerns about demand, especially amid a weakening economy in top importer China, and traders are also worried about a U.S. recession.
PPI cooling rate exceeds expectations
Oil markets are also awaiting a slew of key economic data this week for more clues on growth and interest rates.
Data released earlier on Tuesday showed that U.S. producer price growth fell more than expected in July from an annual rate, the latest sign of cooling inflationary pressures in the world’s largest economy.
Final demand rose at an annual rate of 2.2% last month, down from a revised 2.7% rate in June, according to Labor Department data. Economists had expected economic growth to fall to 2.3%.
Excluding more volatile items such as fuel and food, the so-called “core” monthly rate slowed to 0.0% from a revised 0.3% in June and to 2.4% from a revised 3.0% in June.
The report, released a day before much wider attention, expected inflation to remain at an annual rate of 3.0% in July, unchanged from June’s reading.
Traders expect the Fed to cut interest rates by 25 or 50 basis points in September, and cooling inflation could lead to a sharp rate cut.
In addition to the inflation data, U.S. data will be released later this week.
(Ambar Warrick contributed to this article.)
Data from China will also be released later this week and will provide more clues to the world’s largest crude oil importer.
OPEC cuts oil demand forecast
The Organization of the Petroleum Exporting Countries (OPEC) said it expected oil demand to increase by 2.11 million barrels per day in 2024, down from its previous forecast of 2.25 million barrels per day.
In a report released on Monday, Cartel said doubts about China are growing as it continues to grapple with its post-COVID-19 economic rebound.
The lower demand forecast raises questions about the scope of OPEC’s plans to begin phasing out production cuts.
The production cuts have heightened concerns about a slowdown in global oil demand this year, particularly from China, the world’s largest oil importer.
Monday’s downward revision to demand forecasts comes months before the cartel meets to decide its production route for the coming months.
