Brent oil falls by more than 10% last week - Commerzbank

The price of Brent oil has fallen by more than 10% in the last week and a half and is now trading at around $73 per barrel, close to its 9-month low. Although the headlines in recent days have been dominated by developments on the supply side, it is the fundamental demand concerns that have created a kind of 'imbalance': Reports of production outages barely caused the oil price to rise, while the prospect of possible higher supply put prices under heavy pressure, Commerzbank commodity strategist Barbara Lambrecht notes.

How much is the demand for oil really weakening?

"The focus of demand concerns is China, where demand has been particularly disappointing in recent months. Chinese crude oil imports, which will be published next Tuesday as part of the foreign trade data, are therefore likely to attract particular attention. A positive surprise would probably lead to a recovery in oil prices. Next week, the three energy agencies will also publish their new monthly outlooks."

"The US Energy Information Administration's outlook for the US market is likely to attract particular attention next Tuesday. Last month, the agency was more optimistic about US demand for the current year and somewhat more pessimistic for the coming year, but also forecast demand growth of 1% for 2025. If these forecasts are confirmed, this should support sentiment, especially as the outlook for US oil production is probably being downgraded against the backdrop of significantly lower prices."

"However, the latest hard figures for July were rather disappointing. After the IEA barely adjusted its forecasts last month, China's demand could now be revised downwards. Nevertheless, the same applies here: As OPEC+ has now postponed its production increase by at least two more months and Iraq and Kazakhstan have additionally been forcefully obliged to curb their production, the IEA could report a balanced oil market for the fourth quarter. This is also likely to support the price level because it will prevent an increase in OECD oil inventories."