Oil Prices Plunge as OPEC Lower Demand Expectation
Oil prices plunged on Wednesday as the Organization of Petroleum Exporting Countries (OPEC) lowered its global oil demand forecast for 2021 by 140,000 barrels per day (bpd) but kept growth unchanged for 2022 at 4.2 million bpd.
International benchmark Brent traded at $83.31 a barrel for a 0.13% loss after ending the previous session ended at $83.42 a barrel. American benchmark West Texas Intermediate (WTI) traded at $80.50 per barrel at the same time for a 0.17% decrease after ending the previous session at $80.64 a barrel.
Price slumps followed the release of data from China’s General Administration Customs showing the country’s crude oil imports plummeted 15.3% in September year-over-year.
The world’s largest crude oil consumer decided to sell oil from its strategic reserves last month, adding a domestic oil supply of about 9.99 million barrels per day (bpd), compared to 11.8 million bpd in September last year.
China also announced on Tuesday that it would enable its coal-fired power plants to charge some consumers market-driven electricity prices in response to power shortages from record-high coal prices.
In its World Economic Outlook published on Tuesday, the International Money Fund (IMF) said price pressures caused by supply-demand mismatches and higher commodity prices are expected to subside next year.
The IMF also trimmed its 2021 global growth forecast to 5.9% from the 6.0% forecast it made in July, leaving the 2022 global growth forecast unchanged at 4.9%.
The increasing US dollar index also exerted pressure on oil prices, discouraging investors to purchase dollar-indexed crude oil.
The US dollar index, which measures the value of the American dollar against a basket of currencies including the Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc, reached 94.41.
OPEC revises down 2021 global oil demand, keeps it unchanged for 2022
Global oil demand is now expected to increase by around 5.82 million bpd, or 6.4%, to an average of 96.6 million barrels per day (bpd) in 2021, relative to the higher figure of 5.96 million bpd in the previous report.
According to the report, the downward revision is mainly driven by “lower-than-expected actual data for the first three quarters of this year, despite healthy oil demand assumptions going into the final quarter of the year, which will be supported by a seasonal uptick in petrochemical and heating fuel demand and the potential switch from natural gas to petroleum products due to high gas prices.”
In 2022, the group predicted that world oil demand would grow by 4.2 million bpd, or 4.3%, to reach 100.8 million bpd on the back of a healthy economic momentum in major consuming countries and better management of the COVID-19 pandemic.
Oil demand in OECD countries is forecast to increase by 5.9% to reach 44.7 million barrels this year, while oil demand in non-OECD countries will rise by 6.9% to reach 51.9 million barrels. In 2022, oil demand in OECD countries is set to increase by 4.1% to 46.5 million barrels per day, while the oil demand of non-OECD countries is also expected to rise by 4.5% to 54.3 million barrels.
Demand for OPEC crude in 2021 is forecast to be 100,000 bpd higher than in 2020 at 27.8 million bpd, and next year is expected to reach 28.8 million bpd.
OPEC crude oil production rises in September
Global oil production in September increased by 610,000 bpd compared to the previous month to average 95.93 million bpd, reflecting a year-on-year rise of 4.9 million bpd.
The report shows that OPEC crude oil production increased by 486,000 bpd month over month to an average of 27.33 million bpd, while the share of OPEC crude out of total global production rose to 28.5% in September, marking a 0.3% increase compared to the previous month.
Crude oil output increased mainly in Nigeria and Saudi Arabia while production decreased primarily in Venezuela and Libya. Production in Nigeria increased by 156,000 bpd to 1.5 million bpd and rose by 139,000 bpd to 9.8 million bpd in Saudi Arabia.
Meanwhile, oil output in Venezuela decreased by 6,000 bpd to 527,000 bpd and in Libya by 5,000 bpd to 1.5 million bpd. Non-OPEC liquids production in September increased by 100,000 bpd compared with the previous month to an average of 68.6 million bpd. #Oil Prices Plunge as OPEC Lower Demand Expectation