OPEC Expects Oil Demand to Grow in 2023
July 12, 2022
With the Federal Reserve expected to keep raising interest rates, open interest in NYMEX futures fell on July 7 to its lowest level since October 2015 as investors cut back on risky assets. Speculative longs have liquidated about 20% of their positions.
The next round of the Consumer Price Index comes out tomorrow and the outlook is for it to be a new high at 8.8% year over year in June versus 8.6% in May.
The US dollar has continued to rally, and it is near parity with the Euro, and this is a potential head wind for crude oil.
The market remains concern about the plan by Western nations to cap Russian oil prices. Russian President Vladimir Putin has warned that further sanctions could lead to “catastrophic” consequences in the global energy markets.
Due to more COVID-19 cases in China they have implemented new mobility restrictions which should impact demand.
Official monthly data showed that US crude oil production fell in April by 0.5%. Production was 11.6 million bpd in April compared to 11.7 million bpd in March.
The oil market continues to be pulled in two directions between tight physical crude oil fundamentals and lower oil demand concerns from economic slowdowns and rising COVID-19 cases in China.
OPEC delivered its first oil-market outlook for 2023. OPEC suggests that demand will grow to exceed supplies by 1 million bpd with most OPEC members already at full production.