- Oil fell as U.S. inflation rose to a 40-year high
- WTI lost nearly 6% this week and is trading below $86/BBl
- The core consumer price index—which does not include food and energy—rose 6.6% from 2021, reaching its highest level since 1982
- The overall CPI rose 0.4% last month and was up 8.2% from a year ago, which was a faster-than-expected rise
- U.S. inflation data increases the risk of higher interest rate hikes, which could in turn threaten the outlook for growth
- The IEA, in its monthly report for October, reduced its estimate of the global oil demand's growth in 2022 by 0.06 MMBbl/d to 1.9 MMBbl/d
- They also reduced their 2023 growth forecast by 0.47 MMBbl/d to 1.7 MMBbl/d due to "stronger economic headwinds" from inflation and rising interest rates
- The organization has warned that the move by OPEC+ to reduce oil supply raises the possibility that rising energy costs could act as the " tipping point for a global economy already on the brink of a recession."
- In its October Oil Report, OPEC+ revised down the growth in global oil demand by 0.5 MMBbl/d to 2.6 MMBbl/d
- The group supported their revision by citing inflationary pressures and China's COVID-zero policy
- The group also reduced the forecast growth in global demand for 2023 by 0.4 MMBbl/d to 2.3 MMBbl/d from their September report
- Officials in the Biden administration expressed concerns about the effectiveness of a Russian oil price cap, warning that their plans may fail in light of OPEC+'s last-week production reduction of 2 MMBbl/d (BBG)
- Some officials are concerned that production cuts may spike crude prices and create increased market volatility
- The worries follow President Biden's advice that the U.S.-Saudi Arabia relationship needs to be reevaluated after Saudi Arabia pushed for lower crude outputs