Oil Firms as OPEC Cuts Demand Outlook, IEA Warn of Recession
Oil prices firmed on Thursday as the Organisation of Petroleum Exporting Countries cuts demand outlook while International Energy Agency (IEA) said in a report that OPEC+ production cut could push the global economy into recession.
At the press time, Brent crude futures were trading around the $93 per barrel mark, pressured by lingering worries about a recession-driven demand downturn.
In another bearish report, OPEC has slashed its global oil demand growth forecasts for 2022 and 2023 by 460,000 and 360,000 barrels per day, respectively, citing stubbornly high inflation, stalling growth in developed economies, and persistent coronavirus-induced lockdowns in top consumer China.
The US Energy Department also lowered its expectations for US and global consumption, seeing US consumption rising slightly by 0.9% in 2023 from a previous forecast of 1.7% while projecting global consumption to increase just 1.5% from an earlier forecast of 2%.
Meanwhile, an industry report showed that US crude stockpiles surged by more than 7 million barrels last week. Putting a floor under prices were growing concerns about tighter global supplies as OPEC and its allies, including Russia, agreed to cut production by 2 million barrels per day in its October meeting.
In its latest report, the IEA downgraded its oil demand growth estimates slightly for this year to 1.9 million bpd and by 470,000 bpd in 2023 to 1.7 million bpd. READ:Oil rises after OPEC warn members to stick to quotas
The energy market is under pressure as well from the U.S. dollar, which has rallied broadly, including against low-yielding currencies like the yen.
The Federal Reserve’s commitment to keep raising interest rates to stem high inflation has boosted yields, making the U.S. currency more attractive to foreign investors.
WTI crude futures fell to below $86 per barrel on Thursday, extending its losing streak to four sessions as hot inflation data in the US ramped up bets that the Federal Reserve could be even more aggressive in driving interest rates higher.
The fresh figures added to the hawkish tone from the Fed’s latest meeting as per the minutes released this week, adding to blows of lower energy demand expectations.
# Oil Firms as OPEC Cuts Demand Outlook, IEA Warn of Recession#
