Oil Hinges On Clash Between OPEC+ And Its Rival IEA
By Grant Smith, Bloomberg Markets reporter and editor
In the past 24 hours, oil traders have received clashing outlooks from two of the market’s leading forecasters — which one is right will determine how prices end this year.
On Monday the OPEC producers’ group once again slashed its forecasts for global oil demand in the fourth quarter, indicating that markets face a supply surplus unless the cartel and its allies implement the output cuts they announced — to much US irritation — last month.
The forecast suggests OPEC+ is likely to continue keeping a tight leash on supplies when it meets on Dec. 4. That would also be consistent with recent comments from Saudi Energy Minister Abdulaziz bin Salman, who said at the COP27 talks in Egypt last week that OPEC+ will remain “cautious.”
A contrary take on the oil world was provided today by the International Energy Agency, which advises major consumers like the US, Germany and Japan. The IEA warned that oil inventories in developed nations have sunk to the lowest since 2004, leaving the world vulnerable to shocks as EU sanctions on Russian supplies come into force next month.
Brent oil prices have retreated a little this week to near $90 a barrel, giving OPEC’s perspective some vindication. But if the global economy skirts a recession, and China’s reopening gathers pace, the IEA’s predictions of a squeeze could come true.
Wed, 11/16/2022 – 12:51