Oil rally hits barrage of Omicron demand as glut worries rise – Business News

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  • First drop in Brent 2022 forecast since August survey
  • Oil prices on track for best year since 2009
  • Oil demand forecast to increase by 3.2 to 6 million bpd in 2022
  • Investors consider OPEC’s next move at January 4 meeting

REUTERS: Oil analysts lowered their price forecast for 2022 as the coronavirus variant Omicron hinders the recovery in fuel demand and risks a supply glut as producers pump more oil, yesterday showed a Reuters poll.

A survey of 35 economists and analysts predicted that Brent crude would average US $ 73.57 per barrel in 2022, about 2% below the consensus of US $ 75.33 in November. This is the first drop in the 2022 price forecast since the August poll.

US crude is expected to average US $ 71.38 per barrel in 2022, up from a consensus of US $ 73.31 the month before.

“With the growth in demand for oil slowing, supply growth persisting and the energy crisis easing, we see the oil market balance increasing instead of contracting in 2022 and we therefore let us expect prices to tend to fall from current levels, “said Norbert Rücker, analyst at Julius Baer.

Benchmark Brent crude prices, currently trading at around US $ 80 per barrel, are on track for their biggest annual jump since 2009, as fuel demand rebounded.
However, the new Omicron variant of the coronavirus is spreading faster,

forcing nations to tighten restrictions. If restrictions continue, this could reverse the recovery in oil demand. The global reopening will improve once Omicron’s current surge has passed, said Edward Moya, senior market analyst at OANDA, adding that oil prices would likely remain volatile as OPEC + keeps traders on the lookout for their gradual increases in production.

The Organization of the Petroleum Exporting Countries and its allies, known as OPEC +, will meet on January 4 to decide their production policy after agreeing to stick to the plan to increase production by 400 000 barrels per day and per month. “On the supply side, the OPEC + strategy, the US-Iran nuclear talks and the speed of US shale recovery will all come into play, but will be secondary to demand,” analyst Suvro Sarkar said. from DBS Bank.
Demand increased from 3.2 to 6.0 million barrels per day (bpd) in 2022.

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