Concerns over Chinese demand cap crude gains

Front-month ICE Brent has gone up by $0.56/bbl on the day, to $94.29/bbl at 09.00 GMT.

PHOTO: OPEC+ crude oil production rose in September, but was still 3.6 million b/d below the group members' collective target, according to an S&P Global survey. Getty Images

Upward pressure: 

Investment bank UBS has forecast that Brent will move above the $100/bbl mark over the coming quarters. It expects oil market to tighten further.

OPEC+ has agreed to slash its joint production quota by 2 million b/d from November, compared to August levels. But because several OPEC+ members have already been unable to meet their current production quotas, the group's actual production cut will very likely be smaller. A survey by S&P Global estimates that OPEC+'s November cut will be around 780,000 b/d, mostly borne by Saudi Arabia and the UAE .

Downward pressure:

The International Monetary Fund (IMF) has cut global growth forecast for 2023. It has warned that “worst is yet to come,” and predicted global growth to slow down to 2.7% next year.

IMF says the world economy has “the weakest growth profile since 2001” - if the 2008 financial crisis and 2020-2021 peak Covid-19 pandemic downturns are discounted.

The resurgence of Covid-19 in China and implementation of new restrictions have led to concerns that oil demand will decrease.

China has imposed fresh lockdowns and travel restrictions in number of cities after the national number of new daily Covid-19 cases tripled during a weeklong holiday, CBS reports, citing China’s national broadcaster CCTV.

A survey by S&P Global has found that OPEC and allies (OPEC+) boosted crude production by 170,000 b/d in September, and to the highest production level since April 2020. But the group's total output still remains around 3.6 million b/d below its collective target.

By Konica Bhatt

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