Market risk appetite suffered a blow, and U.S. oil gave back nearly 2% gains

On Thursday (February 10), the cloth oil tail edged down 0.08% to close at $91.48 / barrel. Earlier, OPEC maintained its forecast for global oil demand growth in 2022 unchanged, saying that there was room for upward adjustment, and the cloth oil once broke through the $93 mark. But risk assets took a hit after hawkish remarks by Fed officials, and the cloth oil gave back intraday gains.

Economic data showed that U.S. inflation soared to a four-decade high, prompting St. Louis Fed President Bullard to advocate a sharp rate hike. After Bullard's remarks, interest rate futures markets showed a 60% chance of a 50 basis point rate hike in March, causing U.S. stocks to fall as a result. The dollar recovered some of the earlier lost ground. A stronger dollar has made oil and other commodities more expensive for investors holding other currencies.

In the face of rising cost pressures, oil is seen as a safer bet. Stewart Glickman, an energy stock analyst at CFRA Research, said that in times of inflation, it is usually good for commodities. As a physical commodity, oil tends to preserve its value better. Oil and gold are now seen as safer havens.

OPEC wrote in the report that global oil demand is expected to increase by 4.15 million b/d this year, unchanged from last month's forecast, with global oil demand increasing significantly by 5.7 million b/d in 2021. Commenting on the demand outlook for 2022, he said: "Based on the strong economic recovery observed continuously, and the fact that gross domestic product (GDP) has reached pre-pandemic levels, there is general upside potential for demand forecasts. With growth expected to be stronger in most of the world's economies, the short-term outlook for global oil demand is certainly bright. Global demand for oil from its member states is expected to be 28.9 million b/d in 2022, an increase of 100,000 b/d from the previous month. ”

The report also shows that OPEC production has risen as OPEC+, which is made up of OPEC and other oil-producing allies, phased out record production cuts implemented in 2020. OPEC+ aims to increase production by 400,000 bpd per month, with 10 member countries increasing production by about 254,000 bpd, but production growth is lower than this target due to the difficulties of some oil-producing countries. In January, OPEC production increased by only 64,000 b/d to 27.98 million b/d. Oil production fell in seven of OPEC's 13 members, including Venezuela, Libya and Iraq.

Saudi Arabia, the largest exporter, increased production by 54,000 b/d, but Saudi Arabia told OPEC that its production increased by 123,000 b/d to 10.145 million b/d. Overall supply growth projections for non-OPEC producers remain unchanged in 2022, as do U.S. shale oil production estimates. Global demand for oil from its member countries is expected to be 28.9 million b/d in 2022, an increase of 100,000 b/d from the previous month, theoretically providing room for further increases in production.

In addition to macroeconomic factors, investors are also closely watching the Iran nuclear talks, the outcome of which could add more crude oil to global markets. Geopolitical tensions in Eastern Europe are also of concern. The United States and its allies have warned that Russia's massing of nearly 130,000 troops on the Ukrainian border may be in preparation for an invasion, but Russia has repeatedly denied planning to attack Ukraine.

This article originated from Huitong Network