Oil Price Forecast | 22nd November 2022

Important things that happened recently:

Oil markets remain finely balanced going into the winter months, with OECD stocks trending at the lowest levels since 2004. The approaching EU embargoes on Russian crude and oil product imports and a ban on maritime services will add further pressure on global oil balances, and, in particular, on already exceptionally tight diesel markets.

A proposed oil price cap may help alleviate tensions, yet a myriad of uncertainties and logistical challenges remain. As the main central banks keep raising interest rates, worries about slowing economic growth and the possibility of a worldwide recession grow, which in turn lowers demand for oil globally. With Gazprom stopping one of its engines and the Kremlin claiming that another Nord Stream turbine had “some issues,” the Nord Stream gas pipeline has recently dominated the headlines. Significant energy price volatility is anticipated as the news develops and gas supply uncertainty for Germany and the Eurozone grows.

China recorded recorded three Covid deaths over the weekend, the country‘s first deaths from the virus since May this year. China’s capital Beijing tightened Covid measures in the last three days as the local case count climbed to several hundred per day. With COVID-19 restrictions in the world‘s top crude importer China and anticipation of further interest rate increases stoking concerns about a global economic slowdown and decreased gasoline consumption, resulting in oil prices dropping to their lowest level since Russia’s invasion of Ukraine.

What we can expect today:

After the report released that OPEC members were contemplating raising production, the energy sector saw major volatility, however these rumors were immediately debunked when Saudi Arabia denied the reports. Brent and WTI both experienced notable overnight lows of 82.40 and 75.35, before experiencing a rapid retracement. With the next support levels for Brent and WTI at 83.60 and 76.40, respectively, expect the prices to stabilize at their present levels before trading lower once more.