Prices Retreating In Face Of Gloomier Demand Outlook

Oil prices continued to unwind their gains from last week after OPEC+ announced production cuts, because of a weakening demand outlook. WTI is down 0.8% from its close to be trading below $89/bbl and approaching its 50-day MA, while Brent is -0.6%, but both are off of their session lows.

• Last week’s supply concerns have been overtaken by worries about the global economy as the IMF revised down its GDP forecasts and Biden stated that a “slight recession” was possible. China’s assertion that its “Zero-covid policy” is the best way to face the virus, has added to expectations that global oil demand will weaken.
• Biden reiterated his anger at Saudi Arabia for agreeing to the OPEC+ cuts and stated that the US will be revisiting its relationship with the major oil producer.
• OPEC, the International Energy Agency and US Energy Information Administration are all scheduled to release outlooks this week. A downward revision to demand expectations is likely to put further pressure on prices.
• US data remain the focus of the week with the September PPI out today as well as the FOMC minutes followed by the CPI on Thursday.