Crude oil below $ 100 a barrel. The third month of falling raw material prices

The WTI oil futures fell below $ 98 a barrel on Monday. Previously, their valuation fell for two consecutive months. The weakening global demand outlook may outweigh the signs of supply expansion and capacity utilization problems, contributing to a downward trend in oil prices.

Official data released over the weekend showed that in July this year. The activity of factories in the economy of the world's largest oil importer, China, unexpectedly decreased. The weakening global outlook and the outbursts may have contributed to this, lowering demand the COVID-19 epidemic. In turn, the reduction in demand for crude oil may put pressure on the decline in oil prices. The downward trend may be amplified by the fact that not only the Chinese but also the US economies show signs of weakness. Last week's data showed that the US economy contracted for the second consecutive quarter.

Stabilization of supply and record in the US

Libyan oil minister told Bloomberg that domestic production had normalized to 1,2m barrels a day after a series of earlier production disruptions. The markets seem to be waiting for Wednesday's meeting now OPEC +, which is expected to maintain a policy of moderately expanding oil supplies in the face of capacity constraints and underinvestment in oil fields, which keeps global supply low and, as a result, oil prices at relatively high levels.

According to the EIA agency, global consumption of liquid fuels will increase by 2,2 million b / d in 2022 and by 2,0 million b / d in 2023. In turn, the production of crude oil in OPEC will increase by 2,4 million barrels / d, to the average of 28,7 million barrels / d in 2022 and further to 29,3 million barrels / d in 2023. oil by OPEC members averaged 26,3 million b / d in 2021.

According to the EIA in its report, the production of crude oil in the US may increase on average to 11,9 million b / d in 2022 and 12,8 million b / d in 2023, which would mean the largest annual oil production in the USA. The current record is 12,3 million b / d and was set in 2019.

In oil, there is hope that inflation will be brought under control

The situation on the crude oil market seems to have a significant impact on the level of inflation, and this may affect the monetary policy of central banks. If the price of crude oil remains in the region of USD 100 per barrel in the coming months, the chances of a faster decline in inflation, especially in the winter months, will increase. Then the so-called base effect, i.e. high oil prices in the past, which may flatten the percentage changes in the annual relation.