Oil prices this Tuesday, October 18, 2022, despite the slowdown due to health restrictions, President Xi Jinping reaffirmed on Sunday the soundness of his zero Covid policy at the opening of the 20th Chinese Communist Party Congress.
“In other words, there is currently very little light at the end of the economic tunnel for China,” a huge crude-consuming country, says Stephen Brennock of PVM Energy. “This is bad news for the country’s near-term oil demand outlook,” the analyst continued. “Since the turn of the millennium, China has been the main driver of global economic growth and oil demand.”
China also surprised on Monday by announcing the postponement of the publication of its quarterly growth, scheduled for Tuesday.
However, PVM Energy notes that the economy of its neighbor, India, is in “good health”, placing the country “at the head of the growth in demand” for crude oil with consumption expected to increase by 400,000 barrels per day over the year.
But overall, the outlook for demand remains bleak. The Organization of the Petroleum Exporting Countries (Opec), the International Energy Agency (IEA) and the U.S. Energy Information Agency (EIA) agreed last week on less robust demand than expected in 2022 and 2023 in their respective monthly reports on the black gold market.
On the gas side, natural gas continued its decline, with the Dutch TTF futures contract
118.50 per megawatt-hour (MWh) after falling to 115 euros, its lowest level since the end of June.
“These encouraging developments are mainly due to a very robust and resilient inflow of liquid natural gas from the U.S., as well as the recent completion” of the Greek-Bulgarian Sofia pipeline, which began operations in October, both of which are helping to emancipate Europe from Russian gas, says Alex Fierro, broker at Marex.
The analyst also believes that the European Union’s dependence on Moscow’s gas has decreased significantly, from 42% of EU gas imports to 7% since the beginning of the Russian invasion of Ukraine.
