The crude oil futures fell to the lowest level this year on Tuesday, as market concerns grow over global demand weakness, especially from China, the world's largest oil importer, and the possibility of OPEC+ increasing production next month.

On Tuesday, US WTI crude oil futures fell nearly 4.4%, wiping out all gains for the year. Oil prices are under pressure due to weak crude oil demand and the prospect of potential supply increases. The New York Mercantile Exchange October delivery price of West Texas Intermediate (WTI) crude oil futures fell by $3.21, a 4.36% decrease, closing at $70.34 per barrel, erasing this year's gains and reaching the lowest level since December 12, 2023. Brent crude oil fell below $75 per barrel, wiping out all gains for 2024.

US manufacturing indicators rebounded in August from an eight-month low set in July, indicating some improvement in employment conditions, but the overall trend still suggests sluggish manufacturing activity. The manufacturing PMI for August was 47.2, up from the lowest level of 46.8 set in November, July. The PMI has been below the threshold of 50 for the fifth consecutive month, but above 42.5, which the ISM believes usually indicates a gradual economic expansion in the future.

StoneX analyst Fawad Razaqzada said, "Recent data shows no signs of accelerating import demand from Europe, North America, and China, indicating that the oil market will not be as tight as expected a few months ago."

"Excess supply will need to be eliminated through either reducing oil production or a sudden recovery in the global economy. Both of these scenarios appear unlikely to happen, at least not immediately."

According to representatives involved in the discussions, OPEC and its allies will gradually resume production in the coming weeks, adding 0.18 million barrels per day to the supply.

Ritterbusch analyst stated, "We believe that OPEC+ is in an exceptionally difficult situation, as their determination to support oil prices is being challenged by non-OPEC oil-producing countries continuously losing market share over a long period of time." "This means that in the event of falling oil prices, revenues will be lost, exacerbating concerns about the budget needs of major oil-producing countries in OPEC."

The legislative body of Libya has agreed to appoint a new central bank governor within 30 days, and progress has also been made in resolving a dispute that has led to the interruption of Libya's crude oil production and exports.

Sumitomo analyst Robert Yawger said that the return of Libyan oil "will obviously conflict with OPEC's production cuts". "If you bring back both of these products at the same time, the market will obviously be oversupplied."

In addition, the Nymex RBOB gasoline for delivery in October fell to a nearly three-year low, closing at $1.9777 per gallon, down 5.5%, marking the largest decline since October 4, and the lowest closing price since December 3, 2021.

Strategist Joe DeLaura of Rabobank Netherlands stated that the end of the U.S. summer driving season combined with ample inventories is putting pressure on gasoline.

Patrick De Haan of Gasbuddy said that a significant drop in oil prices could lead to retail gasoline prices falling to the lowest level since 2021 by the end of October.