Week In Review - 4/14/23

This week, oil futures experienced a modest uptick of 30 c/bbl on Friday morning, recovering from a dip earlier in the week. Both Brent and WTI crude benchmarks are on course for their fourth consecutive weekly gain – a streak not seen since June 2022. Market participants eagerly await further macroeconomic releases and the kickoff of the first quarter of the 2023 earnings season as equity futures, yields, and the US dollar remain steady.
On Thursday, crude prices opened flat but eventually fell by $1.10/ bbl without any apparent fundamental driver. However, equities and yields rallied after Consumer Price Index (CPI) and Producer Price Index (PPI) data revealed figures in line with – or weaker than – anticipated. In response, OPEC published its monthly report explaining the surprise production cuts implemented by the group. OPEC cited these production cuts as “precautionary measures aimed at supporting the stability of the market.”

The International Energy Agency (IEA) also lowered its global crude production expectations for 2023. The IEA expressed concern that OPEC+ producers’ output cuts could exacerbate the anticipated oil supply deficit in the second half of the year, potentially impacting consumers and the global economic recovery. The group expects a global oil supply decline of 400,000 bpd by year-end, with non-OPEC+ sources increasing production by 1 million bpd, compared to a 1.4 million bpd decrease from OPEC+. The IEA notes that rising global oil inventories may have influenced OPEC+’s decision, as OECD industry stocks reached their highest level since July 2021. The growth is mainly driven by increased production in the US and Brazil.

OPEC+ and the IEA disagree over global oil supply and demand forecasts, with the IEA representing consumer countries that argue supply reductions drive up prices and risk recession. In contrast, OPEC+ blames Western sanctions for market volatility and inflation.

Although demand outlooks vary, the IEA maintained its global oil demand forecast for 2023 at 101.9 mb/d, representing a two mb/d growth from 2022, with non-OECD countries accounting for 90% of the demand increase. However, demand from the US and Europe is expected to slow down due to weakened industrial activity. Furthermore, Russian oil exports hit their highest level since April 2020, driven by robust oil product flows.

This week, oil futures experienced a modest uptick of 30 c/bbl on Friday morning, recovering from a dip earlier in the week. Both Brent and WTI crude benchmarks are on course for their fourth consecutive weekly gain – a streak not seen since June 2022. Market participants eagerly await further macroeconomic releases and the kickoff of the first quarter of the 2023 earnings season as equity futures, yields, and the US dollar remain steady.
On Thursday, crude prices opened flat but eventually fell by $1.10/ bbl without any apparent fundamental driver. However, equities and yields rallied after Consumer Price Index (CPI) and Producer Price Index (PPI) data revealed figures in line with – or weaker than – anticipated. In response, OPEC published its monthly report explaining the surprise production cuts implemented by the group. OPEC cited these production cuts as “precautionary measures aimed at supporting the stability of the market.”
The International Energy Agency (IEA) also lowered its global crude production expectations for 2023. The IEA expressed concern that OPEC+ producers’ output cuts could exacerbate the anticipated oil supply deficit in the second half of the year, potentially impacting consumers and the global economic recovery. The group expects a global oil supply decline of 400,000 bpd by year-end, with non-OPEC+ sources increasing production by 1 million bpd, compared to a 1.4 million bpd decrease from OPEC+. The IEA notes that rising global oil inventories may have influenced OPEC+’s decision, as OECD industry stocks reached their highest level since July 2021. The growth is mainly driven by increased production in the US and Brazil.

OPEC+ and the IEA disagree over global oil supply and demand forecasts, with the IEA representing consumer countries that argue supply reductions drive up prices and risk recession. In contrast, OPEC+ blames Western sanctions for market volatility and inflation.
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Although demand outlooks vary, the IEA maintained its global oil demand forecast for 2023 at 101.9 mb/d, representing a two mb/d growth from 2022, with non-OECD countries accounting for 90% of the demand increase. However, demand from the US and Europe is expected to slow down due to weakened industrial activity. Furthermore, Russian oil exports hit their highest level since April 2020, driven by robust oil product flows.

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