Oil resumed its downward trend on Tuesday, tanking more than 3% after oil alliance OPEC lowered its demand growth forecast in 2024 and 2025.

On Tuesday, West Texas Intermediate (CL=F) slid roughly 4% to settle at $65.75 per barrel, while Brent (BZ=F) also fell more than 3% to close at $69.19 per barrel, its lowest level since December 2021.

In its monthly report, OPEC said it expects oil demand growth in 2024 to increase by about 2.0 million barrels per day, 80,000 barrels less than its prior estimate. The oil alliance also slightly lowered its 2025 growth forecast.

China was one of the main drivers of the downward revision. The country has been facing economic headwinds amid a housing crisis. It has also increasingly turned to natural gas, which is less expensive and considered cleaner than oil, as part of its energy transition.

“Diesel demand was subdued by weak manufacturing, construction, and trucking activity, as well as the penetration of LNG [liquified natural gas] trucks, weakening the demand for transportation diesel,” said the report.

Despite the revision, the oil alliance's expectations are still higher than other industry estimates.

"OPEC+ has simply been over optimistic with their demand growth forecasts that are nearly double the estimates coming from the EIA or IEA," Andy Lipow, president of Lipow Oil Associates told Yahoo Finance on Tuesday.

"The revision in their growth forecasts are simply an acknowledgement of the current supply/demand dynamics," he added.

Wall Street analysts have turned gloomier on crude, lowering their price target on the commodity in part due to weak Chinese demand.

Increasing signs of economic cracks in the US and Europe, where the summer driving season has been unwinding, have also weighed on prices.

Last week OPEC+ delayed unwinding some of its voluntary production cuts, originally slated for October.

In its monthly outlook, the US Energy Information Administration said it anticipates Brent will go higher as OPEC+ production cuts mean less oil is being produced globally than is being consumed.

"We expect the Brent crude oil spot price to average $82 per barrel in 4Q24 and average $84 per barrel in 2025," said the report.

Oil's downturn has helped precipitate a plummet in gas prices in the US as well, with at least one analyst predicting the national average would fall to $3 by the end of the year, or sooner.

On Monday, traders were assessing the possible impact of Tropical Storm Francine's trajectory toward Texas and Louisiana on oil and gas prices.