OPEC further cuts world oil demand forecasts

Fitch reduced its oil price outlook for 2022 expecting Brent Crude prices at $50 per barrel down from an earlier projection of $53 a barrel. — Reuters  File

Fitch reduced its oil price outlook for 2022 expecting Brent Crude prices at $50 per barrel down from an earlier projection of $53 a barrel. — Reuters File

OPEC, in its monthly report, said it now expects global oil demand to contract by 9.5 million barrels a day to 90.2 million barrels a day, versus its previous call for a 9.1 million barrel-a-day fall.

Brent crude LCOc1 settled down 22 cents, or 0.6%, at $39.61 a barrel while U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 7 cents, or 0.2%, at $37.26 a barrel.

The storm forced energy firms to shut 21.4%, or 395,790 barrels per day (bpd), of offshore crude oil production in the northern Gulf of Mexico, the USA government said on Monday.

The price of crude has fallen by double-digit percentages in September, with weaker-than-expected demand metrics, price cuts from major producers and economic jitters combining to shock prices out of their summer torpor.

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Typically oil prices rise when production is shut down, but with the coronavirus pandemic getting worse, demand concerns are to the fore, while global supplies continue to rise. The hurricane storm is disrupting oil supplies for the second time in less than four weeks, after hurricane Storm Laura swept through the Gulf coast. For 2021, OPEC said it expected weakness in Asia demand to spill over, while a slower recovery in transportation fuel requirements in the OECD will limit oil demand growth potential in the region.

Opec and its allies will hold an online monitoring meeting on Thursday to assess whether the vast production curbs they've been making are still sufficient to stave off an oil glut as the resurgence of coronavirus batters the world economy.

While there are few signs that the OPEC+ alliance is looking to adjust those plans this month, "the impact of Covid-19 related developments on already fragile global economic conditions remain [s] challenging and will require coordinated global policy action from all market participants", OPEC said in its release.

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