OPEC slashed its global oil demand growth estimates on Wednesday for both 2022 and 2023, citing economic headwinds and Covid in China. The decision comes just a week after OPEC+ announced a 2 million barrels per day cut to its production target. OPEC believes the global economy has entered into a period of significant uncertainty and deteriorating macroeconomic conditions, OilPrice said.

OPEC revised down its estimate of global oil demand growth for 2022 by 460,000 barrels per day (bpd), citing China’s Covid lockdowns, economic headwinds in developed economies, and inflationary pressures everywhere. OPEC now sees world oil demand growing by 2.6 million bpd this year to average 99.7 million bpd. Similarly, the cartel also slashed its oil demand growth forecast for 2023, by 360,000 bpd, expecting growth at 2.3 million bpd next year. 

There were plenty of conflicting signals for the oil market to digest last week. Bearish news included an increase in crude stocks of almost 10 million barrels, a huge week-on-week change. U.S. inflation data was also worrying for oil, with the core consumer price index hitting a 40-year high in September. On the other hand, diesel inventories in the U.S. dropped by 4.9 million barrels, suggesting a troubling shortage ahead of winter. 

In Europe, strikes in France are adding to fuel supply fears, with one union walking out of talks today after rejecting an offer of a pay rise. The OPEC+ cut and a price cap on Russian crude are two other bullish factors looming over oil markets. Overall, oil prices have fallen last week, with both Brent and WTI set to post weekly losses after two weeks of gains.