Crude oil prices tumbled overnight Tuesday as growing COVID-19 cases in China increased ongoing worries of an economic slowdown, both fueling fears of demand destruction, Australia’s ANZ Bank said in a Wednesday note.
The prospect of more supply further compounded the pessimistic outlook for oil, the bank noted. US President Joe Biden is set to ask Saudi Arabia to boost production during his visit there, while French President Emmanuel Macron is hosting United Arab Emirates ruler Mohammed bin Zayed next week.
France is reportedly in talks with the UAE about increasing supplies as the European Union weans itself off Russian energy, ANZ Bank said.
Meanwhile, the Organization of the Petroleum Exporting Countries in its latest outlook expects demand to exceed supply by more than 1 million barrels per day in 2023. To fill the gap, OPEC would need to significantly ramp up output, the bank said. This comes as members fall behind their target volumes due to underinvestment and political instability.