Brent tumbles as OPEC trims global oil demand forecast, daily Covid cases surge in China
Front-month ICE Brent has slumped $4.05/bbl lower on the day, to $92.24/bbl at 09.00 GMT.
PHOTO: OPEC has trimmed its global oil demand forecast by 100,000 b/d for both this year and next year. Getty Images
Upward pressure:
OPEC has cut its forecast for non-OPEC liquids supply growth this year by 30,000 b/d to 1.9 million b/d, and implied that there will be a supply deficit throughout the year.
As for OPEC's own crude oil production, it decreased by 210,000 b/d to an average of 29.49 million b/d in October, according to its monthly oil market report.
In addition, Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman has told Bloomberg TV that the bigger OPEC+ group will stay cautious about oil production due to "plenty of uncertainties" in the global economy.
Downward pressure:
There has been a surge in China's daily Covid-19 cases as it reported more than 17,000 new cases yesterday. Oil markets' cautious optimism has been dampened by renewed fears about lockdowns in Chinese cities including Beijing, as well as weak industrial output in October.
According to Stephen Innes, managing partner at SPI Asset Management, “rolling lockdowns across heavily populated areas in China penalise mobility and oil demand even more than economic activity.”
In light of China's zero-Covid-19 policy, geopolitical uncertainty, and weaker economic activity around the world, OPEC has trimmed its global oil demand forecast by 100,000 b/d for both this year and 2023. It now expects global oil demand to increase by 2.5 million b/d this year and to rise by 2.2 million b/d in 2023.
Trade sources cited by Reuters say Chinese refiners are reducing their purchases of Russian crude oil as EU sanctions approach and uncertainty grows over the G7 price cap. This will further impact China's oil import demand. It was reported just a day earlier that Chinese refiners had asked Saudi Aramco to cut crude oil deliveries in December by half.
By Konica Bhatt
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