OPEC (Organisation of the Petroleum Exporting Countries) brings together oil producing and exporting countries. Every month, it also issues a report with detailed information on the oil market and forecasts of production and demand for crude. Clues could be extracted from these, such as the rate of economic development of individual countries or regions.
Black gold production
In the third quarter of this year, total crude production was 100.46 million barrels per day, up 5.4% year-on-year. The US was the largest single producer of this crude, providing 19.21% of the total world supply. It is worth noting that production in the US, which is not an OPEC member, increased by more than 8% from the previous year. OPEC cartel countries (including Saudi Arabia, the UAE and Kuwait) supplied 29.3% of world supply. Although they reported production cuts, their daily output increased by 11.75% year-on-year, translating into the largest increase among the world's producers.
Crude oil prices on world markets appear to have fallen recently. They have already fallen by more than 30% since their March peaks. This seems to have been heavily influenced by the increase in oil production. Many experts suggest that more available oil on the market may lead to a fall in the price of oil.
Source: Conotoxia MT5, XTIUSD, Daily
The prediction for the coming months is that oil production growth would continue at a fairly high level. In the current quarter, it is expected to average 1.7% over the previous quarter. Estimates for next year assume an average increase in production of 1.5% over the previous year. Whether this could actually happen would become clear in a few months.
There will be no crisis, please disperse
Oil consumption usually reflects well the level of economic development of a country. Data provided by the cartel indicate that an economic slowdown may occur in the first quarter of 2023 in China and Russia. Forecasts for the following quarters are more favourable compared to the current year. Average oil demand growth in 2023 could be 2.2% over the previous year (currently at 2.6%). For this reason, we can expect declines in the listings of a Chinese equity fund such as the iShares MSCI China ETF (MCHI), which may not count this year as one of its best.
Source: Conotoxia MT5, MCHI, Weekly
According to market projections and the number of orders contracted, India's economy could grow the fastest, at an average rate of 4.95% year-on-year. Therefore, the listing of the iShares MSCI India ETF (INDA), which mirrors India's main index, could prove to be a long-term investment opportunity. It seems worth considering such an investment.
Source: Conotoxia MT5, INDA, Weekly
Grzegorz Dróżdż, Junior Market Analyst of Conotoxia Ltd. (Conotoxia investment service)
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