Page 8 - MEOG Week 46 2022

MEOG PRICES & PERFORMANCE MEOG

Caution abounds as OPEC

cuts demand growth forecast

OPEC OPEC this week cut its forecast for 2022 global situation in Eastern Europe, allowing for less
oil demand growth for a fifth time since April, hawkish policies,” OPEC said.
also trimming its 2023 outlook, citing mounting Oil maintained its downward trend after
economic challenges, including high inflation the report was released, trading around $95 per
and rising interest rates. barrel.
Oil demand in 2022 will expand by 2.55mn For October, with oil prices weakening on
barrels per day (bpd) or 2.6%, OPEC said in a fears of a recession, the group made a 100,000
monthly report – down 100,000 bpd from the bpd cut to the OPEC+ production target, with
previous forecast. “The world economy has an even bigger reduction planned for Novem-
entered a period of significant uncertainty and ber. Saudi Arabia said the latest cut was nec-
rising challenges in the fourth quarter of 2022,” essary to respond to rising interest rates in the
the group said in the report. “Downside risks West and a weaker global economy. US President
include high inflation, monetary tightening by Joe Biden has criticised the decision, calling it
major central banks, high sovereign debt levels short-sighted.
in many regions and persisting supply chain con- In the report, OPEC said that in Q2 and Q3,
straints,” it added. global oil supply had outpaced oil demand by
In just over two weeks’ time, the OPEC+ 200,000 bpd and 1.1mn bpd respectively, having
group will meet in Vienna on December 4. been in a deficit of 300,000 bpd during Q1.
OPEC+, which recently cut production targets, OPEC’s output for October was reported
will remain cautious, Saudi Arabian Energy to have fallen by 210,000 bpd to 29.49mn bpd,
Minister Prince Abdulaziz bin Salman Al Saud, more than the pledged OPEC+ reduction, led by
OPEC+’s de facto leader, was quoted as saying a 149,000 bpd cut by Saudi Arabia. The Kingdom
last week. itself, however, reported a smaller drop to OPEC
In 2023, OPEC expects oil demand to – of 84,000 bpd, bringing its October output to
increase by 2.24mn bpd, also 100,000 bpd lower just below 11mn bpd.
than previously forecast. Despite commenting Prince Abdulaziz said OPEC+ would remain
on the growing challenges OPEC left its 2022 cautious on oil production, noting that members
and 2023 global economic growth forecasts saw uncertainties in the global economy ahead
steady and suggested there was upside potential, of the bloc’s next meeting in December.
despite risks being skewed to the downside. “Our theme is being cautious,” he was quoted
“These come from a variety of sources. as saying at the COP27 summit in Egypt, add-
[In particular] inflation could be positively ing: “it’s being responsible and not losing sight of
impacted by any resolution of the geopolitical what the market required”.™

P8 www. NEWSBASE .com Week 46 16•November•2022