Macro oils short-term outlook: August 2022 Report

Commodity Market Report 04 August 2022

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Report summary

Oil prices continued to slide during July as signs of demand erosion added up along with the risk of a recession – pointing towards weaker demand growth. Brent averaged $112.60 in July, compared with our forecast for $113.00/bbl. OPEC+ agreed to only a small 100,000 b/d increase for September, which dampened expectations of a larger adjustment upward in the wake of President Biden’s trip to Saudi Arabia. Downward price pressure will persist if it becomes clearer the US and EU have moved into a recession. Highlights of our early August Macro Oils Monthly Update include: • Forecast for OPEC production after 3 August meeting • Russia production and the US price cap • US supply still slow and steady growth • Price and demand in our recession case

Global supply: OPEC+ opts for a minimal supply increase and Libya production bounces back
- Russia: production stabilises in July; US proposes price cap for Russia crude oil exports
- Non-OPEC supply: upward revisions to Russia and Argentina exceed downgrades to Brazil
- US Lower 48: growth remains slow and steady
- OPEC supply: OPEC+ agrees to a 100,000 b/d increase for September
Global demand: Demand growth under pressure from slowing economic growth
- Risks to our 2022 and 2023 outlook and comparison to recession scenario
- 2022: Demand erosion and continued Covid restrictions trim our 2022 demand outlook
- 2023: Demand to rise to pre-pandemic levels as global economic may find a soft landing