Global oil demand may average 100.03mn barrels per day (bpd) in 2022, up 4.24mn bpd from 2021; Rystad Energy said and noted that in a slow vaccination scenario, it expects oil demand to only reach 99.07mn bpd.
“Outlook for stronger oil demand in 2022 is always offering support to bullish traders and helps add barrel dollars but the market knows better that Covid-19 still holds some uncertainty for forecasts ahead,” noted Rystad Energy’s Oil Markets analyst Nishant Bhushan.
He said, “As tropical storm Nicholas spared US production from further disruptions, it is difficult to see how oil prices can increase further in the near term, and the market is now likely on top of the curve before returning output drives prices lower – unless of course global supply suffers another surprise.”
After Wednesday’s rally, Bhushan said, “the big question today was if oil prices are able to keep their gains and remain at such high levels.”
Energy Information Administration (EIA)’s “confirmation of a surprisingly large draw” of crude inventories in the US helped maintain price gains but now - like being on top of a ladder – there can turbulence with every move, and it will be difficult for prices to hold this altitude for long – especially as US production recovers in coming days and weeks.
Bhushan said the Ida-affected oil production capacity continues to recover in the US, and this is expected to reflect on prices in coming days, but for now the slow pace of that recovery coupled with the stronger crude inventory stock draw seem to be supporting prices.
On Wednesday, EIA reported a big commercial crude oil stock draw of 6.42mn barrels, significantly higher than last week’s crude draw of 1.53mn barrels.
“The considerably high stock draw in the US is the result of the supply disruption caused by Hurricane Ida in the last three weeks. We might see some spillover effects in the coming week too as the recovery of the US Gulf of Mexico (GoM) supply continues to be slow,” Bhushan said.
The tropical storm, Nicholas, which was briefly upgraded to Hurricane status did not cause any major impact on either upstream or downstream facilities and thus the bullish run was slightly capped in early trade hours today.
On demand side, both IEA and OPEC revised up their forecast for 2022, with OPEC expecting demand to reach 100.8mn bpd in 2022 while IEA estimates it to be around 99.8mn bpd, Bhushan noted.
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