In the monthly oil market report, OPEC revised down Q4 oil demand forecasts to average 99.70m bpd, down 110k bpd from last months’ projections. For 2022, Overall, global oil demand would rise by 5.96m bpd in the whole of 2021. Demand growth forecasts for 2022 was revised from 3.28m bpd to 4.1m bpd.
It said the “increased risk of COVID-19 cases primarily fueled by the Delta variant is clouding oil demand prospects going into the final quarter of the year.” As a result, “second-half 2021 oil demand has been adjusted slightly lower, partially delaying the oil demand recovery into first-half 2022.”
“The pace of recovery in oil demand is now assumed to be stronger and mostly taking place in 2022,” OPEC said. “As vaccination rates rise, the COVID-19 pandemic is expected to be better managed and economic activities and mobility will firmly return to pre-COVID-19 levels.”
SNB keeps rate at -0.75%, upgrade inflation forecasts
SNB keeps sight deposit rate unchanged at -0.75% as widely expected. It reiterated that is is “willing to intervene in the foreign exchange market as necessary, in order to counter upward pressure on the Swiss franc”. The Swiss franc remains “highly valued”.
SNB said, “the war in Ukraine has had an effect on the Swiss economy above all via the strong increase in commodity prices”, and are likely to “weigh on consumption and increase companies’ production costs”. Trade is likely to be affected by “albeit not severely given Switzerland’s limited direct economic ties to Ukraine and Russia”. Supply bottlenecks “could deteriorate further” and uncertainty could have an “adverse impact on investment activity.”. 2022 growth forecasts was revised lower to around 2.5%.
The inflation forecast, conditioned on policy rate at -0.75%, was raised in general. But inflation is projected to peak at 2.2% in Q2 2022, then slow gradually to 0.7% in Q2 2023, then climb back to 1.1% in Q1. For the year as a whole, inflation is projected to be 2.1% in 2022 (upgraded from 1.0%), 0.9% in 2023 (up graded from 0.6%), and then 0.9% in 2024 (new).
Full statement here.