Outlook: Macro sentiments and physical oil markets point to near term oversupply

Outlook: Macro sentiments and physical oil markets point to near term oversupply

Macro sentiments in many parts of the world have been weak, keeping prices lower with prices trading near a 2-month low.

Time spreads of Dubai crude oil swaps have continued to trend lower, reflecting the weaker demand fundamentals in several parts of the world.

With recessionary indicators, sentiment has been weak. Spreads in the Brent complex have also weakened with the level of backwardation dropping, pointing to near term sufficient supply of oil in European markets.

With the December 05 EU deadline to ban imports of Russian oil and G7 imposition of price caps, refiners in Europe appear to have stocked ample supplies of oil in advance adding pressure on the physical oil cargo differentials.

Oil demand to surge

The OPEC trimmed forecasts for 2022 global oil demand growth for the 5th time since April and also reduced the expectations for next year on account of the global economic scenario and the looming downturn.

Oil demand for 2022 is now forecasted to increase by 2.55 million bpd, 0.1 million bpd lower than last month forecasts.

2023 estimates have also been cut by 0.1 million bpd to a current forecasted growth of 2.24 million bpd. The OPEC+ is expected to meet on Dec 04 to decide on the