Sep 30, 2022
VOT Research Desk
Key Insights and Analysis
After an unexpected drop in US inventories, the price of oil extended its recovery from the monthly low ($76.25), and crude may stage a larger recovery in the coming days as it reverses ahead of the January low ($74.27).
The price of oil trades to a fresh weekly high ($82.94) as it carves a series of higher highs and lows. Crude oil may continue to retrace the decline from the monthly high ($90.39) as data prints coming out of the US instill an improved outlook for energy consumption. However, the price of oil failed to test the January low.
The Energy Information Administration (EIA) recently released data that showed crude inventories decreasing for the first time this month. Stockpiles decreased by 0.215 million in the week ending September 23, compared to predictions of 0.443 million. As the Organization of Petroleum Exporting Countries (OPEC) reverts to its previous production schedule, indications of resilient demand may influence the group. Additionally, the group may provide a steady supply over the upcoming months as the rising interest rate environment in advanced economies dampens the outlook for global growth.
As the most recent Monthly Oil Market Report (MOMR) asserts that “in 2023, expectations for healthy global economic growth, combined with anticipated improvements in the containment of COVID-19 in China, are expected to boost oil consumption,” OPEC may, in turn, follow a predetermined course. It remains to be seen whether the organization will adjust its production schedule at the subsequent Ministerial Meeting on October 5, as US output remains below levels prior to the pandemic.
