(MENAFN- Khaleej Times) Global oil demand may average 100.03 million barrels per day (bpd) in 2022, up 4.24 million bpd from 2021, Rystad Energy forecast as it noted that such stronger outlook would offer support to bullish traders.
However, in a slow vaccination scenario, the oil demand would only reach 99.07 million bpd, analysts at the independent energy research said.
Rystad's forecast is in lockstep with the revised demand outlook projected recently by the Organisation of Petroleum Exporting Countries (Opec) and International Energy Agency (IEA). While Opec expects global oil demand to reach 100.8 million bpd in 2022 IEA estimates it to be around 99.8 million 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 analyst Nishant Bhushan.
“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, he said.
The big question is if oil prices are able to keep their gains and remain at such high levels, he said.
Oil dropped more than $1 a barrel to around $74 on Monday as rising risk aversion weighed on stock markets and boosted the dollar, while more U. Gulf oil output came back online in the wake of two hurricanes.
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 EIA recently trimmed its Brent crude spot price estimate for 2021 by 10 cents/b to $68.61/b, while maintaining its 2022 estimate at $66.04/b. Similarly, the agency cut its 2021 estimate for WTI crude prices by 24 cents/b to $65.69/b and expects prices to fall further in 2022 to average $62.37/b.
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.
EIA last week 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 supply continues to be slow, Bhushan said.
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Issac John Editorial Director of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.
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