Confusing signals for OMCs with crude supply-demand equation set to change

Lower oil prices can improve margins, but they could impact inventory value while a third Covid wave can potentially hurt growth

The supply-demand equation in the global crude oil market is expected to change from a supply deficit, to supply-surplus by January 2022. Crude and gas prices have started correcting down as a result.

Part of the reason for this is that the US and Canada are ramping up production. Also, global growth estimates have been downgraded due to the current Covid wave which has put pressure on the EU’s healthcare system and led to lockdowns on global travel.  

In general, lower energy prices are good for India. But it will mean lower growth on the export front,