The crude oil cartel is clear: compared to the predictions of a strong slowdown in demand, its data says otherwise. “Oil market fundamentals remain strong despite exaggerated negative sentiments,” reads the latest monthly report from the Organization of the Petroleum Exporting Countries (OPEC), published this Monday. The entity also revises world consumption slightly upwards in 2023 and maintains its forecasts for 2024 stable.
The organization, based in Vienna and always led by Saudi Arabia – which has been applying, for months, with Russia, a strong snip on its supply in order to support the price of crude oil – maintains that global demand for this source of dirty energy “continues demonstrating strength and resilience”, with data “better than expected” in this fourth quarter of the year. Particularly, he adds, due to the resilience of Chinese—and, in general, Asian—imports for their refineries and, to a lesser extent, due to the good tone of international air travel, which increases kerosene consumption.
“The robustness of the physical oil market is reflected in the differentials seen in practically all regions in October and so far in November,” OPEC technicians assess. The document comes to light at a key moment, with the barrel of Brent (the one taken as a reference in Europe) clearly below the price level prior to the start of the war in the Middle East and in areas of minimum levels since the past. summer. A decline that the cartel attributes directly to the hand of “speculators.”
The group of exporting countries bases its forecast of improved demand this year on the progress of the US economy, which is resisting surprisingly well the interest rate increases applied by the Federal Reserve to control inflation. Also to the recent upward revision of growth in China by the International Monetary Fund (IMF). The downside risks, he argues, could come from a tightening of monetary policy that lasts longer than expected or that “geopolitical developments” occur that he does not fully define.
The expanded version of the cartel – the so-called OPEC+, which also includes the third largest producer and second largest exporter of crude oil on the planet, Russia – will meet on the 26th to review its pumping policy. In accordance with what has been expressed in recent months by Riyadh and Moscow, its leaders de facto, everything indicates that supply cuts will continue in the coming months. Contradicting, in part, the latest report’s confidence in the strength of demand.
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