Moody’s, Energy News, ET EnergyWorld
The U.S. Energy Information Administration (EIA) recently raised its estimates of global demand growth and now expects demand for oil to slightly exceed pre-pandemic levels by 101 million barrels per year. day (bpd) by the end of 2022, after a strong recovery to 97 million bpd in 2021.
Updated expectations from the International Energy Agency and OPEC also predict that demand for oil will return almost entirely to pre-pandemic levels in 2022.
Moody’s said the price range reflects its perspective on the level of oil prices needed for producers to profitably reinvest. As oil producers deplete their existing reserves as they generate profits, oil prices need to support reinvestment over the medium term for the industry to keep its resources ever lower and to support oil levels. existing production, as well as growth.
“The ongoing recovery in demand, rising costs and lower inventory levels from September 2021 will continue to support the strong momentum in oil prices. We forecast that OPEC-plus producer countries will continue to reduce their production cuts in 2022, reaching an excess of supply over demand by the end of 2022, from a sustained deficit in 2021, ” the agency said in a report.
Moody’s lowered its medium-term oil price forecast by $ 5 a barrel in May 2020 amid sharply falling production and development costs on the basis of rapidly falling demand. He predicted that the oil industry would have to postpone developing higher-cost reserves until demand had fully recovered.
But an accelerated recovery in global oil demand in the third quarter of 2021 pushed oil prices into the $ 70- $ 80 per barrel range. Oil producers saw significant cost savings in 2020-2021, but production costs began to rise alongside demand for oil and a broader economic recovery.
According to Moody’s, the industry will also need to rely more on the development of entirely new, higher-cost assets to meet demand over the medium term, after an extended period of investment in lower-cost, fallow assets that allowed the industry to withhold development costs.