Oil price rundown - supply, demand, Omicron and tomorrow's OPEC meeting
- With Brent oil (CO1:COM) prices down 13% in a week, the market narrative has taken a decidedly bearish turn ahead of tomorrow's OPEC decision
- The Omicron variant has caused a demand scare, with several countries around the world announcing travel restrictions; the White House is set to announce its Omicron plan tomorrow, with press indicating that the US will introduce travel restrictions
- Actual demand statistics ahead of the Omicron scare indicate a robust demand recovery ongoing, with recent data from the TSA showing continued travel demand growth, German oil product demand exceeding pre-pandemic levels in September, revised US demand statistics for September showing a 1.8mb/d increase YoY and Indian refined oil volumes up 14% YoY in October
- Goldman strategist Jeff Curry was on CNBC yesterday indicating this week's oil price decline implies a significant demand impact, something approximating zero flights globally for three months
- On the supply side, Russian production in November grew by 50kb/d, around half of the country's quota under the OPEC+ agreement, while Iraq exports were up ~170kb/d, and the US coordinated inventory release brings 50mb to the market in coming months
- Additionally, Iran is back at the negotiating table in Vienna and hoping to increase oil supplies to the global market
- With a reduced oil price, solid demand backdrop, concerns over Omicron, a mixed supply picture, and Iran negotiations ongoing, the market's focus turns to tomorrow's OPEC+ meeting, as traders handicap the potential for a change of course out of the cartel