Crude values inch lower even as OPEC upholds demand forecast
Front-month ICE Brent has decreased by $1.96/bbl on the day, to $93.09/bbl at 09.00 GMT.
PHOTO: Oil futures decline as US inflation rises 8.3% in August, according to CPI data. Getty Images
Upward pressure:
OPEC has upheld a robust demand forecast, citing signs that major economies have fared better than expected despite headwinds such as higher inflation. It expects demand to rise by 3.1 million b/d in 2022 and by 2.7 million b/d in 2023, unchanged from last month’s estimates.
US Secretary of State Anthony Blinken has blamed Iran for stalling the process of negotiating a revived nuclear deal. He now views an agreement as "unlikely" to be reached in the near term.
Goldman Sachs expects Brent to surge to $125/bbl next year, despite a potential G7 cap on Russian crude. G7 countries have proposed a price cap on Russian crude oil exports from 5 December, and a cap on refined products from 5 February next year. Goldman Sachs warned that any price cap will be "bearish in theory, bullish in practice" for oil prices as Moscow could respond by slashing exports to G7 countries.
Downward pressure:
United States consumer prices rose unexpectedly in August, increasing the odds of an aggressive Fed rate hike. The US consumer price index rose to 8.3% in August, which was sharply up from a year earlier, while slightly down from 8.5% in July.
Japanese financial firm Nomura expects the Federal Open Market Committe to raise its short-term interest rate target by a full percentage point at its policy meeting next week, because of the emergence of upside inflation risks.
Demand concerns are likely to weigh on crude prices as China has currently placed over 20% of its population under some form of Covid-related restrictions. The Communist Party-ruled country continues with its stringent 'Zero-Covid' policy despite high economic costs, according to reports by Nikkei Asia.
By Konica Bhatt
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