Oil prices dip as OPEC cuts demand forecast, economic cues awaited

Investing.com-- Oil prices fell in Asian trade on Tuesday, reversing course from last week’s rebound as anticipation of a slew of economic cues this week sparked caution, while OPEC also cut its outlook on 2024 demand growth. 

Prices had rebounded sharply from over seven-month lows as fears of a worsening conflict between Iran and Israel saw traders attach a greater risk premium to crude. Media reports said that an Iranian strike against Israel was likely to happen this week.

But overall gains were still held back by persistent concerns over demand, especially following weak economic prints from top importer China, and as traders also fretted over a U.S. recession. 

Brent oil futures expiring in October fell 0.4% to $81.94 a barrel, while West Texas Intermediate crude futures fell 0.4% to $77.98 a barrel by 21:35 ET (01:35 GMT). 

OPEC cuts oil demand forecast 

The Organization of Petroleum Exporting Countries (OPEC) said it expects oil demand to grow by 2.11 million barrels per day in 2024, down from earlier forecasts for growth of 2.25 million bpd.

In a monthly report released on Monday, the cartel cited increased doubts over China, as the country continued to struggle with a post-COVID economic rebound. 

The lower demand forecast raised doubts over just how much scope there was in the OPEC's plans to begin phasing out its production cuts.

The cut ramped up concerns over a slowdown in global oil demand this year, especially amid fears of sluggish demand in China, which is the world’s biggest oil importer. 

Monday's demand forecast cut comes just months before the cartel is set to meet and decide on the path of production in the coming months.

Economic data awaited for more cues 

Oil markets were also awaiting a string of key economic readings this week for more cues on growth and interest rates.

Consumer price index inflation data is due on Wednesday and is widely expected to factor into the outlook for U.S. interest rates. Traders are pricing in either a 25 or 50 basis point rate cut by the Federal Reserve in September. 

Beyond the inflation data, industrial production and retail sales data from the U.S. is due later in the week.

Industrial production and retail sales readings from China are also due later this week and are set to offer more cues on the world’s biggest crude importer.