oil price in 2022

Tiny Omicron vs. Giant Oil Industry

admin 4 January 2022

According to a Reuters poll conducted on Friday, oil analysts have reduced their price expectations for 2022 as the Omicron coronavirus type provides headwinds to recovering fuel demand while also raising the likelihood of a supply surplus as producers pump more oil.

Thirty-five economists and experts predicted that Brent crude would average $73.57 per barrel in 2022, which is approximately 2 percent lower than the overall predictions of $75.33 in November. Since the August survey, it has been the first time the price expectation for 2022 has been lowered. The average price of U.S. oil in 2022 is anticipated to be $71.38 per barrel, down from the previous month’s consensus of $73.31 per barrel.

The oil market balance is expected to expand in 2022, according to Julius Baer analyst Norbert Rücker; as demand growth slows, supply growth continues, and the energy crunch eases. As a result, we anticipate oil prices to trend downward from current levels in 2022, he said.

Benchmark Brent oil prices are currently hovering above $80 per barrel, making this the highest year-over-year increase since 2009. Also, Brent crude prices have surged along with demand for transportation fuels. However, countries are tightening limitations because the Omicron coronavirus’s spread is speeding up. The surge in oil demand could be stopped if limitations are not eased.

A senior market analyst at OANDA says that the global reopening will improve when this Omicron surge is over. Edward Moya asserts that oil prices are likely to stay volatile; because OPEC+ is increasing production slowly, which keeps traders on edge. 

The OPEC+ will meet on January 4th. They will try to deliberate on their production strategy after agreeing to increase output by 400,000 barrels per day each month.

According to Suvro Sarkar of DBS Bank on the supply side, the OPEC+ strategy, the US-Iran nuclear negotiations, and the pace of the U.S. shale recovery will all play a role. Still, the demand side of the equation is not clear yet. Many analysts believed that in 2022, demand will increase by 3.2-6.0 million barrels per day.

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