MarketsOct 15, 2024
Oil Prices Have Been Falling Throughout 2024 — But Saudi Arabia, Weak Chinese Stimulus, and Ailing Demand Could Drive a Further Drop
Global Commodities
Noah Weidner
Discover
Oil is a volatile asset, often moving at the whims of traders — impacted by supply concerns, political events, and more. Throughout 2024, oil prices have been all over the place — starting the year around $70 before reaching $87 by April. But since then, it’s been in a steady decline.
Not a well-oiled machine: As it turns out, geopolitical tensions in the Middle East, which had been fueling the precious energy commodity’s wild swings earlier this year, have been overshadowed by weaker demand from China, consistently strong US production, and ongoing supply cuts from OPEC+. As such, oil prices hit a new low for the year recently, with crude futures testing $65 in September. But as oil nears correction territory, further declines could be on the horizon.
Lower crude valuations could mean cheaper gas for consumers during the holidays, potentially reducing costs across the economy and even leading to a cooler inflation report. However, lower price points will likely hurt domestic energy giants, which are already expected to be the worst-performing sector in the upcoming earnings season.
Alternatively, a bounce: Reduced oil prices would also be bad for producers in the OPEC+ cartel, which had resisted increasing output despite worsening demand. But as oil costs have reminded us repeatedly this year, anything can happen — from geopolitical tensions to election uncertainty and weather events. However, without a catalyst to wake them, oil prices are looking down, not up.
