AMID an uncertain world economy, the Central Bank has high hopes of the local gas sector – in both production and price – it said in its Monetary Policy Report (MPR) for November 2022 published on Monday. On Monday, natural gas traded at US$6.57 MMBtu (Henry Hub price), just above the level of US$6.00 per MMBtu upon which the Government predicated its 2022 budget.
However, the global oil price stood at US$78 and US$73 for Brent and WTI respectively, significantly lagging behind the US$92.50 level upon which the budget was predicated.
The MPR, in its key messages, painted a mixed picture for future prospects globally and locally.
Global recovery remained stymied by a slowed growth in China, the Russia-Ukraine War, inflationary pressures, and a possible recession in the US and elsewhere.
"Supply shocks stemming from the Russia-Ukraine conflict continued to drive commodity prices, (thereby) fuelling inflation and tighter financial conditions.
"Recent cuts to oil production by OPEC+ have kept oil prices firm."
The World Economic Outlook (WEO) in October forecast global growth of 3.2 per cent in 2022, but warned that any reduced demand globally posed a risk for domestic economic activity.
Mulling headwinds and inflation globally, plus growth (energy and non-energy) and better liquidity domestically, the bank retained its overall monetary policy of a 3.50 repo rate, the interest rate it charged to lend money overnight to private banks.
The report said the global economic outlook was clouded by uncertainty and that risks were "titled towards the downside" (meaning negative prospects.)
It said the WEO's forecast of 3.2 per cent growth this year fell to 2.7 per cent for next year.
"The forecasts reflect the anticipated slowdown of the world’s three largest economies – the US, Euro area and China, in 2022 and 2023."
Downside risks were lingering fallout from the pandemic, intensification of Russia/Ukraine geopolitical tensions, and tightening by central banks in advanced economies.
The report then said, "There is uncertainty surrounding the trajectory of international energy prices."
It gave mixed prospects for the global oil price. On one hand, this was pushed up by OPEC+ reducing production quotas by two million barrels of oil per day from November 2022 and by efforts by European Union countries to wean themselves off Russian oil, including an impending embargo due this month.
However, a G7 price cap on Russian oil exports from December 5, will ease global supply constraints by allowing Russian oil to be sold, although limiting Russia’s revenue potential from sales.
All of this, plus a slower-than-expected global growth, hinted at a prospect of lower oil prices, the report alluded.
However, the MPR was optimistic over the prospects for gas prices.
"As for natural gas, continued strong demand, low inventories and the impending winter season may keep gas prices elevated over the final quarter of 2022 and well into 2023."
Further, the Central Bank highlighted TT's "strong growth in natura
