Stronger outlook for oil demand offers support for bullish traders – News
The outlook for stronger oil demand in 2022 still provides support for bullish traders.
Global oil demand could average 100.03 million barrels per day (bpd) in 2022, up 4.24 million bpd from 2021, according to forecasts by Rystad Energy, noting that this stronger outlook would offer support to bullish traders.
However, in a slow vaccination scenario, demand for oil would only reach 99.07 million barrels per day, independent energy research analysts said.
Rystad’s forecast is in line with the revised demand outlook recently projected by the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA). While Opec expects global oil demand to reach 100.8 million bpd in 2022, the IEA estimates it at around 99.8 million bpd.
“The outlook for stronger oil demand in 2022 still provides support for bullish traders and helps add barrels of dollars, but the market is better aware that Covid-19 still contains some uncertainty for the forecast ahead,” noted Rystad Energy analyst Nishant Bhushan.
“While Tropical Storm Nicholas spared US production from further disruption, it is difficult to see how oil prices can rise further in the near term, and the market is now likely at the top of the curve before the return of production drives prices down – unless of course global supply suffers another surprise, ”he said.
The big question is whether oil prices are able to hold their gains and stay at such high levels, he said.
Oil fell more than $ 1 a barrel to around $ 74 on Monday, as rising risk aversion weighed on stock markets and boosted the dollar, while greater production of Gulf oil American has come back online following two hurricanes.
The Energy Information Administration’s (EIA) ‘confirmation of a surprisingly large drawdown’ of crude inventories in the United States helped keep the price gains, but now – as if we were at the top of a ladder – there can be turbulence with every move, and it will be difficult for prices to maintain that altitude for a long time – especially as US production resumes in the days and weeks to come, Bhushan said.
The EIA recently reduced its estimate of the 2021 Brent crude spot price from 10 cents / bbl to $ 68.61 / bbl, while keeping its 2022 estimate at $ 66.04 / bbl. Similarly, the agency has lowered its 2021 estimate of WTI crude prices from 24 cents / bbl to $ 65.69 / bbl and expects prices to fall further in 2022 to average $ 62.37. / b.
Ida-affected oil production capacity continues to rebound in the United States, and this should be reflected in prices in the coming days, but for now, the slowness of this recovery coupled with the largest reduction crude stocks appear to be supporting prices.
Last week, the EIA reported a large commercial crude oil inventory drawdown of 6.42 million barrels, significantly higher than the 1.53 million barrels of crude drawdown last week.
“The considerably high inventory draw in the United States is the result of the supply disruption caused by Hurricane Ida over the past three weeks. We may also see ripple effects over the coming week as the recovery of US supplies to the Gulf of Mexico continues to be slow, ”Bhushan said.