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U.S. crude inventories likely rose last week

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OPEC and IEA cut 2024 oil demand growth forecasts

(Adds latest prices)

By Scott DiSavino

NEW YORK, Oct 16 (Reuters) - Oil prices held near a

two-week low on Wednesday after dropping about 7% over the prior

three days on forecasts for less oil demand growth and reduced

concerns that Middle East conflicts will disrupt supply.

Brent futures fell 3 cents to settle at $74.22 a

barrel, while U.S. West Texas Intermediate (WTI) crude

fell 19 cents, or 0.3%, to settle at $70.39.

Both crude benchmarks closed at their lowest levels

since Oct. 2 for a second day in a row.

Earlier this week, crude prices fell in response to a

weaker demand outlook and a media report that Israel would not

strike Iranian nuclear and oil sites, easing fears of supply

disruptions.

Iran is a member of the Organization of the Petroleum

Exporting Countries (OPEC) and produced about 4.0 million

barrels per day (bpd) of oil in 2023, U.S. Energy Information

Administration (EIA) data showed.

Iran was on track to export around 1.5 million bpd in 2024,

up from an estimated 1.4 million bpd in 2023, according to

analysts and U.S. government reports.

Iran is backing several groups fighting Israel, including

Hezbollah in Lebanon, Hamas in Gaza and the Houthis in Yemen.

Concern about an escalation in the conflict between Israel

and Iran-backed militant group Hezbollah persists. Supply curbs

by OPEC and its allies including Russia, a group known as OPEC+,

remain in place until December when some members are scheduled

to start unwinding one layer of cuts.

On the demand side, OPEC and the International Energy Agency

this week cut their 2024 global oil demand growth forecasts,

with China accounting for the bulk of the downgrades.

The IEA forecast global oil demand would peak before 2030 at

less than 102 million bpd and then fall to 99 million bpd by

2035.

Fiscal stimulus announced in China has failed to give oil

prices much support. China may raise an additional 6 trillion

yuan ($850 billion) from special treasury bonds over three years

to stimulate a sagging economy, local media reported.

Positive economic news from the U.S. and Europe helped limit

the oil price slide on Wednesday.

In Europe, the

euro zone

economy showed some signs of life with a raft of indicators

pointing to lukewarm but still positive growth for a bloc that

has been skirting a recession for over a year.

U.S.

import prices

fell by the most in nine months in September as energy

product costs fell sharply, signalling a benign inflation

outlook that keeps the Federal Reserve on course to keep cutting

interest rates.

After hiking rates aggressively in 2022 and 2023 to tame

a surge in inflation, the Fed started to lower rates in

September.

Lower rates decrease borrowing costs, which can boost

economic growth and demand for oil.

U.S. OIL STORAGE DATA

Weekly U.S. oil storage data is due from the American

Petroleum Institute (API) trade group later on Wednesday and the

EIA on Thursday. The reports were delayed by one day for the

U.S. Indigenous Peoples' Day holiday on Monday.

Analysts projected U.S. energy firms added about 1.8 million

barrels of crude into storage during the week ended Oct. 11.

If correct, that would be the first time energy firms

boosted stockpiles for three weeks in a row since April and

compares with a withdrawal of 4.5 million barrels in the same

week last year and an average increase of 1.1 million barrels

over the past five years (2019-2023).