Organization of the Petroleum Exporting Countries Again Lowered Global Oil Demand Forecasts International oil prices fluctuated to the downside

On November 14, local time, the Organization of the Petroleum Exporting Countries (OPEC) released its "Monthly Oil Market Report"
for November.
In this report, OPEC once again lowered its global oil demand forecast, expecting global oil demand to increase by 2.
55 million b/d in 2022, down 100,000 b/d from its previous forecast, which is the fifth time OPEC has lowered its oil demand forecast
for the whole year of 2022 since April this year.
Affected by this, international oil prices fell
sharply.
Light crude futures for December delivery fell $3.
09, or 3.
47%, to settle at $85.
87 a barrel on the New York Mercantile Exchange by the close of the day; London Brent crude futures for January 2023 delivery fell $2.
85, or 2.
97%, to settle at $93.
14 a barrel
.
Compared with the high point in the second quarter, the price of the two oils has fallen by about 20%, but it is still higher than the same period last year
.
Market analysis believes that the reversal of the balance of supply and demand is the main factor
for the current oil price trend correction.
In addition, the uncertainty of the production plan of OPEC and its oil-producing allies in the production plan will also affect
international oil prices.

The economic situation is grim and global oil demand is expected to be lower

After sharply lowering its global oil demand forecast in October, OPEC once again lowered its global oil demand forecast in its monthly report this month, emphasizing that macroeconomic challenges such as high inflation and rising interest rates are the main reasons
for the contraction of market demand.
At the same time, the world is also facing objective challenges
such as geopolitical risks, restrictions on the prevention and control of the new crown pneumonia epidemic, and a new peak of the epidemic in the northern hemisphere this winter.
The International Monetary Fund (IMF) lowered its forecast for global growth next year to 2.
7 percent from 2.
9 percent in July and 3.
8 percent in January in its World Economic Outlook released last month, adding that it sees a 25 percent chance of slowing growth below 2 percent
.
The IMF estimates that about one-third of the world's economies will contract growth for at least two consecutive quarters this year and next.
Lost output will reach $4 trillion
by 2026.

This week, the agency reiterated that the global economic outlook is more pessimistic
than last month's forecast as downside risks from the Russia-Ukraine conflict and persistent inflation materialize.
Trigly Goodmanson, an economist at the IMF's research department, said on Monday that the purchasing managers' index, which tracks G20 economies, has steadily deteriorated in recent months, confirming that the outlook is bleaker than painted in the October World Economic Outlook and that the difficulties are enormous
.
"Many countries may need to continue to tighten fiscal and monetary policies to drive down inflation to address debt vulnerabilities, and we do expect further tightening
in many G20 economies in the coming months," Trigley Goodmanson said.
These initiatives will continue to put pressure
on economic activity.
”

Major uncertainties in the global economy, combined with fears of a global recession, have heightened the risk of
slowing global oil demand growth.
Affected by this, OPEC lowered its forecast for global oil demand, which is expected to increase by 2.
55 million b/d in 2022, down 100,000 b/d from its previous forecast.
Oil demand growth for 2023 was also revised down to 2.
24 million b/d, down 100,000 b/d
from last month's expectations.

Not afraid of pressure from Europe and the United States, "OPEC+" opened a new round of production cuts

At present, the pullback in oil prices is not a good thing
for the Gulf countries.
In 2020, international oil prices fell sharply, which hit the Saudi economy hard
.
However, this year's high oil prices have pushed Saudi Arabia to become the fastest growing economy
in the G20.
In the second quarter of this year, Saudi Arabia's daily average crude oil export revenue reached $1 billion, an increase of 94% year-on-year, and the total oil export in the second quarter exceeded $91 billion, accounting for 80% of the total export goods in the quarter, also a record high
.
Therefore, maintaining high oil prices is a more favorable economic option
for Saudi Arabia.

Therefore, in the context of weakening demand, OPEC has begun a new round of production cuts
.
OPEC's monthly report showed that the group's capacity fell by 210,000 b/d in October to 29.
49 million b/d, more than double
the previously agreed 100,000 b/d.
According to previous resolutions, OPEC will also collectively cut production by 2 million b/d
starting in November.
For non-OPEC capacity growth expectations, the report lowered its 2022 growth forecast by 30,000 b/d to 1.
9 million b/d
.
In this production cut, oil majors such as Saudi Arabia and the United Arab Emirates will be the main force in the production cut, while other members have already produced below their quotas
due to years of underinvestment or domestic political instability.
OPEC+ will hold a meeting on December 4 to discuss production policy in 2023, but the market does not expect further production
cuts at present.
OPEC said in a report this month that OPEC+'s agreement to cut production by 2 million barrels per day last month should reduce oil production to a level that would allow the market to reach a balance, even if the cuts have not yet been fully implemented
.

It is worth noting that European and American countries have expressed great dissatisfaction
with the "OPEC+" production cut.
At present, the oil market environment is complex, Europe is preparing to impose an embargo on Russian oil, and refiners are scrambling to find alternatives
.
Many people looking for new sources of crude oil have chosen Middle Eastern producers as a potential alternative
.
However, as OPEC+ has begun implementing massive production cuts, the demands of some European refineries eager to secure long-term contracts may be rejected
.
In addition, the United States has also strongly criticized
the "OPEC+" production reduction plan.
Gasoline prices in the U.
S.
have climbed this year, setting a record of more than $5 a gallon in the summer, and prices have since fallen
.
According to the latest data from the American Automobile Association on October 31, the average gasoline price in the United States is $3.
762 per gallon, still more than 50% higher than
when Biden took office.
High oil prices have caused a headache for the Biden administration facing midterm elections, so he has repeatedly called out and even personally visited the Middle East in the hope that OPEC will increase production to reduce oil prices
.
But that expectation has clearly been disappointed
.
At the 27th Conference of the Parties (COP27) to the United Nations Framework Convention on Climate Change (UNFCCC) in Egypt last week, Saudi Energy Minister Abdullah Aziz Salman reiterated that OPEC+ would remain cautious
in its production policy.