Why oil has fallen to its lowest level in almost three years?

Oil prices fell earlier this week to a level not seen since December 2021 after Brent crude fell 8% last week, according to Business Insider.

Worries about global economic growth in early August and worries about a possible recession in the United States, along with a slowdown in China's economy, have hurt the outlook for oil demand, the source said.

In its latest monthly oil market report, OPEC cut its outlook for crude oil demand due to China's slowing economy. Thus, the organization now expects daily oil demand to increase by about two million barrels per day in 2024, 80,000 barrels per day less than in the previous forecast. OPEC also cut its 2025 oil demand outlook by 40,000 barrels per day to 1.7 million barrels.

Due to lower demand expectations and falling oil prices, OPEC has delayed plans to raise production until at least November, a move that is unlikely to have as much of an impact on oil prices as in the past. That's because the United States is producing a record amount of oil and shows no signs of slowing down, writes Business Insider.

U.S. oil production continues to rise, reaching 13 million barrels per day in August, according to Ycharts data, nearly double the level seen in 2014.

David Morrison, senior market analyst at Trade Nation, believes that investors should not expect a rebound in oil prices anytime soon.

"Fundamentals should continue to drive prices, and supply remains plentiful, while the outlook for demand growth is weak," Morrison said. "Recent experience suggests that crude oil can remain in oversold territory for long periods of time, so this (or the location of technical indicators, oscillators, in the oversold zone) should not mean that a comeback is coming."

Yesterday at 1:30 p.m., Brent oil, relevant to the European market, was trading at $70.62 per barrel, after reaching a low of $68.52 the day before. West Texas Intermediate was at $66.98, after hitting a low of $64.78 a barrel, according to Investing.com data.