- Oil trades lower amid concerns of weaker demand
- WTI fell by nearly $1/Bbl this morning to trade near $88/Bbl
- China reported more than 15,000 new cases of Covid on Sunday, with daily new cases in Beijing, Guangzhou, and Zhengzhou reaching record highs (BBG, Reuters)
- Restrictions imposed to contain outbreaks continue to disrupt industrial activities in manufacturing hubs Guangzhou and Zhengzhou
- China's NHC announced an easing of some Covid restrictions on Friday but said in a statement on Sunday that the situation remained "serious and complex"
- Concerns about economic growth and demand disruptions continue to grow as the country upholds its strict Covid-zero policy
- The dollar strengthened for the first time in three sessions
- The USD Index (DXY – a proxy for U.S. Dollar strength against a basket of six international currencies) improved compared to last week's decline of more than 3% to the lowest since August
- A stronger dollar (DXY Index) can cause foreign buyers of dollar-denominated commodities to pay more for the same amount of goods
- In an interview on Saturday, U.S. Treasury Secretary Yellen said that it is "very likely" that EU sanctions will compel Russia to sell some of its crudes at a price cap set by the U.S. and its allies to avoid cutting back on production (BBG)
- The EU and UK will also prohibit companies from providing shipping, finance, and insurance for tankers carrying Russian crude unless the shipments are priced below a cap, a figure that the G7 and EU have not yet agreed upon
- EU sanctions and the G7 nations' price cap on Russian seaborne crude will go into effect on December 5
- Additionally, EU President von der Leyen said on Monday that the EU is "ready to go" to set a price cap for Russian oil
- "We have set all the tools necessary in place in the EU," said von der Leyen at the G20 summit
- OPEC has lowered its forecast for oil demand growth for the fifth time since April (Reuters)
- The group on Monday said that demand would increase by 2.55 MMBbl/d this year, down 0.100 MMBbl/d from its previous forecast
- It reduced the outlook for next year by the same amount, saying demand in 2023 will only rise by 2.24 MMBbl/d
- "The world economy has entered a period of significant uncertainty and rising challenges in the fourth quarter of 2022," said OPEC in the report
- "Downside risks include high inflation, monetary tightening by major central banks, high sovereign debt levels in many regions, tightening labor markets, and persisting supply chain constraints"