Crude oil prices were on track for yet another weekly loss earlier today as pessimism about demand growth in China continued to dominate markets.
At the time of writing Brent crude was trading at $72.45 per barrel and West Texas Intermediate was changing hands for $69.91 per barrel, both down from opening in Asia. Reuters reported the benchmarks could end the week some 3% lower than they started it.
The big reason for the decline was the latest demand forecast about China, issued earlier in the week by its very own Sinopec. The company said oil demand growth in China would peak in three years at a daily demand level of some 16 million barrels or a total of 800 million metric tons.
The forecast comes days after the other state-owned energy giant, CNPC, predicted oil demand in the world’s largest oil importer may well peak next year, driven down by electric cars and LNG-powered trucks. By 2035, forecasts say, half the cars on Chinese roads will be electric.
This was enough to depress prices and the bearish mood also received some support from the jump in the U.S. dollar following the Federal Reserve’s latest rate decision. That decision saw the greenback shoot up to the highest in two years—a development that is usually negative for oil prices as the commodity is traded predominantly in U.S. dollars.
Supply forecasts have also weighed on crude oil prices this week. Several forecasters recently reported they expected the oil market to swing into a surplus next year—or remain in surplus if their assumption is for an already existing supply overhang. JP Morgan became the latest to sound a bearish note, saying it forecast a supply surplus of 1.2 million bpd in 2025 thanks to non-OPEC production growth, which the bank predicted at 1.8 million barrels daily. OPEC, on the other hand, will keep output at current levels, JP Morgan analysts said.
