EIA predicts lower crude oil prices in 2022 – Today in Energy

November 18, 2021

Since the third quarter of 2020, global consumption of crude oil and petroleum products has grown faster than production, leading to lower inventory levels and higher crude oil prices. In our november Short-term energy outlook (STEO), we predict that increased production in OPEC + countries and the United States will lead to increased global inventories of liquid fuels and lower crude oil prices in 2022.

We estimate that global crude oil consumption has exceeded crude oil production for five consecutive quarters, beginning in the third quarter of 2020. During this period, oil stocks in OECD countries (the Organization Cooperation and Development) fell by 424 million barrels, or 13%. . We forecast that global crude oil demand will exceed global supply by the end of the year, contribute to additional drawdowns in inventories, and keep the price of Brent crude oil above $ 80 per barrel (b ) until December 2021.

However, we expect global oil stocks to start building up in 2022, driven by increased production from OPEC + countries and the United States and slower global demand growth for oil. oil. We expect this change to put downward pressure on the price of Brent, which will average $ 72 / bbl in 2022.

Spot prices for Brent, an international benchmark for crude oil, and West Texas Intermediate (WTI), a US benchmark for crude oil, have risen from their April 2020 lows and are now above pre-pandemic levels . In October, the price of Brent crude oil averaged $ 84 / bbl and the WTI price averaged $ 81 / bbl, the highest nominal prices since October 2014. We expect the price of Brent fall from an average of $ 84 / b in October. 2021 to $ 66 / bbl in December 2022 and the price of WTI will drop from an average of $ 81 / bbl in October 2021 to $ 62 / bbl in December 2022.

Futures markets also show high prices for short-term contracts compared to longer-term contracts, a situation known as backlash. Crude oil inventory levels, among other factors, affect the difference between short-term and long-term futures prices. The price differences between crude oil contracts for short-term delivery versus contracts for delivery at later dates indicate that the market expects inventory drawdowns to moderate.

Low inventories of crude oil, both globally and in the United States, put upward pressure on the prices of near-maturity crude oil contracts, while prices of longer-term crude oil contracts are lower, probably reflecting the expectations of a more balanced market.

Low crude oil inventories in the United States, particularly in the Cushing, Oklahoma, transportation and storage hub where NYMEX WTI futures are physically settled, likely contributed to WTI further offsetting the market. Brent. According to our Weekly State of Oil Report, Cushing crude oil inventories stood at 26.6 million barrels on Nov. 12, down 49 percent from the previous five-year average and 32 percent from working storage capacity.

Main contributor: French matthew


Source link

Felix J. Dixon