Oil market bearishness grows, OPEC may consider revising production increase agreement
Oil consumers are finally seeing some good news. both OPEC and the International Energy Agency IEA have lowered their demand forecasts, suggesting that oil prices finally have some meaningful downside potential. But OPEC is ready to change course. in its latest Oil Market Report released this week, the IEA wrote: "Tough new embargo measures amid a surge in outbreak cases in Asia have led us to lower our expectations for global oil demand in the second quarter and for the full year 2022." The IEA also noted that oil consumption by OECD OECD members was lower than previously expected, leading the IEA to cut its oil demand forecast for this year by 260,000 barrels per day to a total of 99.4 million barrels per day from last month's OMR.
At the same time, the IEA noted that oil production increased steadily and significantly in the first quarter of this year, mainly brought about by non-OPEC producers. Whenever an increase in production is led by non-OPEC producers, it is worth watching OPEC's response more closely than ever. Such a response is not yet available, but OPEC itself is lowering its demand expectations for this year, and it is doing so by a much larger margin than the IEA.
In its latest monthly oil market report, OPEC said global oil demand will be 480,000 barrels per day lower than previously expected. It said one reason for the revision was slower economic growth due to the war in Ukraine, and another was the epidemic-related embargo in Asia.
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