Mexican mix down 33% from its March high

The war in Ukraine, inflation, high interest rates will affect economic growth in the world, so the demand for oil on the international market in 2023 will decrease.

The Organization of Petroleum Exporting Countries (OPEC), in its monthly report for October, highlighted that inflation will affect the United States, China and Europe, which means that the demand for oil in the world will decrease.

The document was published days after the agreement of the OPEC + countries that reported that the supply would be reduced by 2 million barrels of oil per day. However, that didn’t help crude prices rally as benchmarks are down around 2% since the announcement.

OPEC predicted in its report for the month that the demand for hydrocarbons will drop by 360,000 million barrels per day, with which the global demand this year will be 99.6 million barrels of energy every 24 hours.

This figure represents an increase of 2.7% compared to what was demanded in 2021; but, for next year, the demand for crude oil will be 102 million barrels per day, an increase of 2.35% more than what was sold in 2022.

However, OPEC stressed that the demand will be 500 barrels of oil less than budgeted by the oil cartel.

OPEC also exposed as a conditioning factor to the oil outlook, the increase in interest rates in the United States, the European Union and the restrictions in China due to the coronavirus pandemic.

Down from highs

Since last March 8, (12 days after the Russian invasion of Ukraine), the date on which the price of oil reached its maximum in the international market, international benchmarks have fallen by more than 28%, while the Mexican mix of export has decreased 33 percent.

The American West Texas Intermediate (WTI) registered 123.7 dollars and this Monday reached 85.46 dollars a barrel, a drop of 30.9 percent.

The European Brent from the North Sea was sold on March 8 at 127.98 dollars per barrel and this Monday it was traded at 91.62 dollars a barrel, a drop of 28.4 percent. The Mexican export mix reached a maximum price of 119.6 dollars a barrel and on Monday it was sold at 79.42 dollars a barrel, a decline of 33.6 percent.

International oil prices fell slightly on Monday as fears that high inflation and energy costs could drag the world economy into recession were offset by China’s continuation of loose monetary policy.

North Sea Brent futures were down 0.01% at $91.62 a barrel, after last week’s 6.4% plunge. The US marker West Texas Intermediate (WTI) fell 0.18% to 85.46 dollars a barrel, after losing 7.6% in the previous week.

For its part, the price of the Mexican export mix fell 0.33% on the first day of the week, to quote at 79.42 dollars a barrel, after closing the previous week with a loss of 7.21 percent.

will increase capacity

The People’s Bank of China (central bank) on Monday renewed medium-term loans that were due and kept the interest rate unchanged for the second month, in a sign that the entity would continue to maintain an accommodative monetary policy.

Beijing will also greatly increase domestic power supply capacity and tighten risk controls on key raw materials including coal, oil and gas, and electricity, a senior National Energy Administration official said on Monday. .

The Asian giant’s government will further increase reserve capacities for key commodities, another state official told a news conference in the Chinese capital.

Oil found support from a combination of factors, including Chinese President Xi Jinping’s comments at the Communist Party Congress reaffirming expansionary policies for the economy, a positive sign for the demand outlook, according to Tina Teng, an analyst at CMCMarkets.

At the same time, the strength of the dollar and the likelihood of further rate hikes by the Federal Reserve helped contain prices.

Oil supply is likely to tighten after the producer cartel and its allies, including Russia (OPEC+), pledged to cut output by 2 million barrels per day.

Meanwhile, a war of words between OPEC’s de facto leader Saudi Arabia and the United States could herald further volatility.