- Oil fell below $70 for the first time since December 2021 as concerns over tightening monetary policy and banking turmoil compete with Chinese demand recovery
- April ’23 WTI lost $2.79 this morning to trade around $68.50/Bbl
- Crude remains under pressure as concerns of economic slowdown due to rate hikes remain in focus
- Last week’s collapse of Silicon Valley Bank and Signature bank, in addition to turmoil at Credit Suisse, continues to weigh on market sentiment
- Also weighing on prices this week was a strong U.S. dollar, which makes oil more expensive for buyers holding other currencies
- However, Chinese economic data showed a recovery in consumer spending, industrial output, and investment after abandoning their Covid-zero policy
- OPEC+ and the IEA both forecast a surplus in the near term, citing seasonal demand lulls and higher-than-anticipated Russian production
- Global oil demand will exceed supply in late 2023, IEA says
- IEA, in its monthly report for March, expects oil markets to flip from a surplus in 1H2023 to a deficit in 2H2023
- The group held their average 2023 global demand forecast at +2 MMBbl/d as China demand and air travel recover, but down from growth of +2.3 MMBbl/d in 2022
- Even with Russia’s 0.5 MMBbl/d production cut for March, global oil supply “should comfortably exceed demand in the first half of the year,” said the bloc in today’s report
- The IEA forecasts global output growth of +1.6 MMBbl/d and expects a surplus in 1H2023
- But, the agency notes that this increase won't be enough to support demand in 2H2023 since a rise in seasonal demand and China's recovery will drive demand to a record 102 MMBbl/d
- OPEC raises Chinese oil demand forecast but warns of macroeconomic risks (Reuters)
- OPEC, in its monthly report for March, kept its 2023 global demand forecast at +2.3 MMBbl/d but adjusted Americas and European demand lower and Chinese demand higher
- OPEC expects Chinese oil demand to grow by 0.710 MMBbl/d in 2023, up from last month's forecast of 0.590 MMBbl/d
- "The rapid rise in interest rates and global debt levels could cause significant negative spill-over effects and may negatively impact the global growth dynamic," added OPEC