WASHINGTON, D.C.(DTN) -- West Texas Intermediate futures traded on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange fell for the third consecutive session on Wednesday after Organization of the Petroleum Exporting Countries lowered its global demand projections through 2023, citing extended COVID-19 restrictions in China along with elevated inflation and rising interest rates in Europe and the United States.
Wednesday's lower settlements in the crude complex follow the release of OPEC's Monthly Oil Market Report which revised lower its 2022 global demand projections by 500,000 bpd to reflect softening economic growth across key demand centers. With this, global oil demand is now expected to grow by about 2.6 million bpd this year, down from 3.4 million bpd seen just three months ago.
For 2023, world oil demand growth was revised down 360,000 bpd to 2.34 million bpd, with developed countries that are part of the Organization for Economic Cooperation and Development accounting for just 400,000 bpd of that increase compared with 2 million bpd coming from non-OECD nations.
The monthly report somewhat defends Saudi Arabia's decision alongside 12 other OPEC countries and 10 non-OPEC oil producers led by Russia to slash OPEC+ output quotas by 2 million bpd beginning next month because of lower demand expectations.
OPEC revised lower non-OPEC liquids production by 340,000 bpd in the fourth quarter to 66.78 million bpd, and expects output in 2023 at 67.13 million bpd, revised down 380,000 bpd from September. For the first quarter of 2023, non-OPEC liquids production was revised down a sizable 600,000 bpd to 66.56 million bpd.
MOMR determined "solid increases in oil and gas rig counts and high fracking activity" in the United States are expected to support strong output, but "[l]ower-than-expected tight oil production in recent months necessitated a downward revision to the US liquids supply growth." OPEC said, "severe inflationary pressure, coupled with logistical bottlenecks and shortages of material and labour, are posing additional challenges."
Further weighing on the complex, Reuters reported this week rising lockdowns and various degrees of controlling population movement in China amid an increase in infections blamed on greater domestic travel earlier in October for the National Day "Golden Week" holiday. Citing the findings of Japan's Nomura Holdings, Reuters said 36 cities in China were under various degrees of lockdown or control affecting 196.9 million people on Monday, up from 179.7 million the prior week.
At settlement, NYMEX November WTI futures were down $2.08 to $87.27 bbl, and ICE December Brent futures declined $1.84 to $92.45 bbl. NYMEX November ULSD futures settled up 0.20 cents at $3.9328 gallon, and the November RBOB contract gained 0.30 cents for a $2.6303 gallon settlement.
Liubov Georges can be reached at email@example.com