By: Harry Altham, Energy Analyst, Market Analysis EMEA & Asia
The oil benchmarks have eased their way down at the start of this week, as concerns mount over China’s road to economic recovery following a series of COVID-induced lockdowns this year. Chinese manufacturing PMI declined during the month of October, recording 49.2 versus an estimate of 49.8; renewed restrictions on movement, such as the one seen in the city of Zhengzhou, plus the impact of the Communist Party Congress in Beijing, is thought to have dampened the numbers beyond initial expectations. As a result, a survey undertaken by Bloomberg estimates that Saudi Aramco may reduce the premium to Oman/Dubai to $5.50/bbl for Asia delivery in December, as traders expect weaker than expected demand from the region. With Arab Light currently trading around the $95/bbl mark (within what we believe is an acceptable level for some of its members), it is currently unclear whether OPEC+ will announce a further cut to production for December at this week’s meeting of delegates. We are also expecting OPEC+’s annual outlook at 12:30 GMT, in which we expect to gain a comprehensive understanding of the group’s interpretation of the supply and demand dynamics currently present in oil markets.
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