March 26, 2023
Oil fell after the OPEC report and Asian data!
Hot Forex Review

Oil fell after the OPEC report and Asian data!

OPEC published its monthly report for November 2022 on Monday. According to this report, OPEC lowered global oil demand growth for this year and 2023. The Organization of the Petroleum Exporting Countries expects that global oil demand to grow by 2.55 million bpd in 2022, down from 2.65 million bpd in the previous month’s report, while in 2023 they expect demand to grow by 2.24 million bpd. This is while OPEC expects the average global surplus to raise by about 300,000 barrels per day for this year.

OPEC lowered its demand expectation for 2022 and 2023

Ahead of today’s API data and tomorrow’s EIA weekly report, Chinese and Japanese economic data missed the market expectations and increased concerns about global demand.

Q3 GDP in Japan contracted by -0.3%, which means -a 1.2% annual decrease in quarter three of 2022. In China, industrial production grew by 5.0% in October, less than the 5.2% expectations and 6.3% growth in September. Also, October Fixed Asset Investment in China increased by 5.8%, less than 5.9% in September. Retail sales shrank 0.5% in October, missing estimates for growth of 1% and tumbling from last month’s reading of 2.5%.

More weak economic data in the world’s second-largest economy indicates that a brief recovery after the lifting of some COVID restrictions in June and July appears to be running out of steam.

The second half of last week also increased a little bit, as some of the Covid restrictions in China were lifted to increase the oil demand outlook. After that WTI price dropped towards $84 per barrel on Thursday, and with Friday’s recovery, WTI ended the week above 88 USD.

But still, the uncertainty over oil demand from China can also affect the Oil market in the next months. China still trying to continue its restricted anti-corona policies. China is the world’s largest energy importer and the possibility of lifting zero-Covid restrictions can increase the oil demand expectations. However, Health authorities in China, do not seem like going to let go of the quarantine and lockdown measures.

From the technical point of view, the price is floating between 92 and 83 dollars. Breaching under $83 can open the doors for the next target at 76 US dollars. On the flip side, as long as it is trading under 92 US dollars, we cannot bet on bulls. So, bears will get stronger under $83, and bulls will need to breathe above $92 to be trustable.

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