Inflation May Be Waning
November 15, 2022
OPEC dropped its forecast for global crude oil consumption due to a combination of global economic concerns, an uncertain geopolitical climate, and persisting supply chain constraints. OPEC now expects 2022 global oil consumption to grow by 2.55 million barrels per day, a drop of 100,000 bpd from their October forecast. The group also lowered their 2023 outlook by the same 100,000 bpd, with expected growth now at 2.24 million for next year.
The European Union embargoes and bans are starting December 5, and this is an underlying support for prices. Also, the shift to colder temperature here in the US for the next two weeks should increase heating oil and fuel demand which should offer some support.
New cases of COVID-19 in China have the market worried about demand. China’s economy is also a concern as factory output has gone down, and retail sales were down for the first time in five months.
The producer price index rose 0.2% in October below the 0.4% estimate. This shows that wholesale prices have increased less than expected and suggesting that “maybe” inflation is waning and fostering hope that the Fed will ease up on rate hikes.