scorecardresearchCrude oil prices saw their second-biggest monthly gain in 2022

Crude oil prices saw their second-biggest monthly gain in 2022

Updated: 01 Nov 2022, 01:17 PM IST
TL;DR.
The surge in oil prices began after the OPEC+ agreed to cut oil production by 2 million barrels per day from November, the largest reduction since the pandemic began, and the reduction is roughly equivalent to 2% of global oil demand.
The Indian rupee On Monday dropped 51 paise to settle at 82.77 against the dollar.

The Indian rupee On Monday dropped 51 paise to settle at 82.77 against the dollar.

Crude oil prices edged lower on Monday after China's factory activity fell short of expectations, raising fears that more Covid-19 restrictions will harm economic activity and may reduce oil consumption in the world's top crude consumer.

On Monday, Brent crude futures slipped 1.02% to trade below $95 per barrel. WTI fell 1.56% and finished at $86.53 per barrel. Nonetheless, Brent crude gained nearly 11.12% in October, one of the largest monthly gains since January, and WTI gained 9.92%, the most since January when it gained 15.50%.

The surge in oil prices began after the OPEC+ agreed to cut oil production by 2 million barrels per day from November, the largest reduction since the pandemic began, and the reduction is roughly equivalent to 2% of global oil demand.

Soon after the production cuts, global brokerage firm Goldman Sachs raised its 2022 Brent price forecast to $104 per barrel from $99 per barrel previously, and it expects the price to rise to around $110 per barrel from $108 per barrel in 2023.

Meanwhile, in September, crude oil prices tumbled 9%, marking a fourth consecutive monthly loss. As prices decline month after month, OPEC+ steps up its efforts by reducing output to 100,000 barrels per day for October, which represented just 0.1% of the world's demand. From June to September, Brent crude prices have corrected by almost 25.90%.

On October 31, OPEC raised its projections for medium-and-long-term global oil consumption and stated that $12.1 trillion in investments will be required to meet this demand despite the transition to renewable energy sources.

Besides, President Joe Biden on Monday accused oil companies of "war profiteering" as he raised the possibility of imposing a windfall tax on energy companies if they don't boost domestic production, PTI reported.

The president suggested he will look to Congress to levy tax penalties on oil tax companies if they don't begin to invest some of their profits in lowering costs for American consumers. Joe Biden issued the warning just days before the November 8 midterm elections.

Back in India, according to a CNBC-TV18 report, state-owned oil marketing companies (OMCs) are likely to reduce the prices of petrol and diesel by 40 paisa a litre from November 1, 2022.

The reduction in prices by 40 paisa daily is likely to continue for the next five days and a total reduction of 2 in petrol and diesel prices in instalments, sources privy to the developments told CNBC-TV18.

Elsewhere, the Indian rupee On Monday dropped 51 paise to settle at 82.77 against the dollar. On October 20, the rupee breached the 83 mark for the first time in its history. The continuous efforts by the RBI to save the Indian currency from the depreciating against a surging US dollar have pushed India's foreign reserves to a new low.

India's foreign exchange reserves fell to a new two-year low of USD 524.520 billion. The forex reserves have declined by around USD 100 billion ever since Russia invaded Ukraine in late February when imports of energy and other commodities got costlier globally.

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First Published: 01 Nov 2022, 01:16 PM IST