Crude oil prices were on course to end the week with a decline, as the latest prediction of softening demand growth reinforced bearish moods among traders.
The prediction came from the International Energy Agency, which said in its latest monthly oil report that it expected oil demand this year to grow by 750,000 barrels daily, “with resilient deliveries in advanced economies contrasting with relatively muted consumption in emerging economies.”
The agency said that demand growth in the Organization for Economic Cooperation and Development had surprised to the upside earlier in the year, adding 80,000 barrels daily in the first half of 2025. The IEA added, however, that it now expected demand to contract in the OECD, although it did not provide a reason for this expectation.
OPEC, meanwhile, reiterated its demand growth projection for the year at 1.3 million barrels daily, noting that most of this growth was going to come from countries outside the OECD. For next year, OPEC sees demand adding another 1.4 million barrels daily, but this failed to move oil prices higher.
Traders appear to be busy wondering how much longer China would continue to absorb available oil to fill its stockpiles and whether there will be more sanctions coming Moscow’s way, especially after President Trump called on the G7 to do what the EU appears reluctant to do, namely use tariffs to reduce Russia’s energy exports in hopes this will bring it to the negotiations table on the Ukraine.
China has stocked up some 187 million barrels since the start of the year, according to the International Energy Agency, with July seeing a build of 26.5 million barrels alone for a string of six consecutive months of stock builds. It appears many believe the country will not be able to continue building its inventories at the same rate, while being cautious about the prospect of new sanctions on Russian oil.
By Irina Slav for Oilprice.com
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