OPEC's monthly report on Tuesday showed that the organization has lowered its forecasts for global oil demand growth in 2024 and 2025, marking the second consecutive month of downward revisions.

The soft outlook further highlights the challenges OPEC+ faces in balancing the market. Last week, OPEC+ delayed its October plans for gradual production increases after oil prices hit a low point in 2024.

On Tuesday, OPEC stated in a monthly report that global oil demand in 2024 is expected to increase by 2.03 million barrels per day, lower than the previous month's expectation of 2.11 million barrels per day.

OPEC pointed out that despite the downward revision, demand growth forecasts still exceed the pre-pandemic historical average of 1.4 million barrels per day and are in line with the industry's upper limit estimate.

The organization has also lowered its forecast for global oil demand growth in 2025 from the previous expectation of 1.78 million barrels per day to 1.74 million barrels per day. Non-OECD countries' demand, driven by China, the Middle East, Asia, and India, will drive next year's growth, adding approximately 1.6 million barrels per day.

Following the report's release, oil prices deepened their earlier decline, with Brent crude briefly falling below $71 per barrel, approaching the lowest levels since March 2023, before rebounding somewhat.

In terms of economic growth, OPEC has raised its forecast for global economic growth in 2024 to 3%, while maintaining the 2025 forecast at 2.9%, consistent with last month's assessment. Forecasts for U.S. economic growth in 2024 and 2025 remain at 2.4% and 1.9% respectively, while the forecast for Eurozone economic growth in 2024 has been raised to 0.8%, with the 2025 forecast remaining at 1.2%.

The disparity among forecasters for the strength of global oil demand growth in 2024 is greater than usual, partly due to different views on China's demand outlook and more broadly, disagreements over the pace of the world's transition to cleaner fuels. OPEC remains at the upper end of industry estimates even after lowering its forecasts.

For the past few months, concerns about weak demand in China have been hanging over the oil market as sales of electric cars surge. OPEC+ is also expected to increase production in December, and Morgan Stanley and other market analysts are all predicting a supply glut in 2025.

Due to the dominant bearish sentiment, oil prices were sold off last week, with U.S. crude and global benchmark Brent crude experiencing their worst few weeks since October 2023. At the beginning of this week, oil prices briefly recovered some ground as the tropical storm Fransin threatened oil and gas production and refining operations along the Gulf Coast of Mexico.

On Monday night, the U.S. Coast Guard ordered the closure of all operations at small ports in Brownsville and other Texas ports. Corpus Christi port remains open with restrictions. According to the National Hurricane Center (NHC), this tropical storm is expected to significantly intensify and become a hurricane on Tuesday.

Exxon Mobil shut down its Hoover oil platform in the Gulf of Mexico due to the storm, while Shell suspended drilling operations on two platforms. Chevron also began shutting down oil and gas production on its two offshore platforms.