While the steady rise in supply could see a significant surplus materialise in 1Q22 and going forward, available data suggest that 2022 is starting off with global oil inventories well below pre -pandemic levels. In this case, global supply would soar by 6.2 mb/d on average in 2022 compared with a 1.5 mb/d rise in 2021. Finally, Saudi Arabia and Russia could set records if remaining OPEC+ cuts are fully unwound. Additionally, Ecuador, Libya and Nigeria are already ramping back up. US oil output is forecast to rise by 1 mb/d on average, to 17.7 mb/d, as operators respond to higher prices by putting more rigs to work. Russia pumped below its quota for the first time since record cuts were enforced.Įven so, world oil supply is forecast to grow sharply this year, with the United States, Canada and Brazil set to pump at their highest ever annual levels. This shortfall was mostly due to under-production in Nigeria, Angola and Malaysia, all faced with technical and operational issues. Producers taking part in the output deal delivered gains of 250 kb/d, well below the allocated amount, and were 790 kb/d lower than the group’s target. In December, world oil supply rose by a modest 130 kb/d to 98.6 mb/d, as outages in Libya and Ecuador and a smaller than scheduled increase from OPEC+ wiped out much of the expected growth. In 1Q22, demand is set for a seasonal decline, exacerbated by increased teleworking and reduced air travel.Īs for supply, disruptions and production shortfalls by some OPEC+ members are tempering growth expectations for 2022. World oil demand is now seen rising by 5.5 mb/d in 2021 and by 3.3 mb/d in 2022, returning to its pre-Covid levels of 99.7 mb/d. As a result, we have revised up our 2021-22 demand estimates by 200 kb/d. Indeed, mobility indicators remain robust and oil demand has been stronger than expected in recent months. But this time around, the surge is having a more muted impact on oil use. Two years after first shaking markets, Covid-19 is once again causing record infections. At the time of writing, Brent was trading at around $87/bbl and WTI at $85/bbl, up nearly $20/bbl from December lows. Robust demand, unscheduled supply outages and strong stock draws in December pushed benchmark oil prices to seven-year highs. Upward revisions to our demand estimates and a slightly lower outlook for world oil supply have tightened our balances for 2022, although they still show a 1Q22 surplus. ICE Brent backwardation doubled, reflecting tight oil stocks. North Sea Dated rose from an average $74.01/bbl last month to $87.30/bbl on 18 January, its highest level since 2014. Crude prices struggled under demand uncertainties in December before a vigorous post-holiday rebound.Preliminary data for December show OECD industry stocks falling by another 45 mb while volumes of oil on the water rose. At 2 756 mb, stocks were down 354 mb on a year ago and at their lowest level in seven years. OECD total industry stocks declined by 6.1 mb in November, as rising crude and gasoline stocks were more than offset by draws in other products.In 2022, net additions are expected to amount to 1.2 mb/d, with runs forecast to gain 3.7 mb/d. In 2021, global refining capacity fell for the first time in 30 years, by 730 kb/d, as new capacity was outweight by closures. Refinery throughputs averaged 79.8 mb/d in 4Q21, up 4.6 mb/d on a year ago. The global refining industry ended 2021 on a high note, with both runs and margins improving.Non-OPEC+ growth of 1.8 mb/d in 2022 will be led by the United States. Oil output from OPEC+ could rise this year by 4.4 mb/d, resulting in reduced effective spare capacity in 2H22 of 2.6 mb/d, held primarily by Saudi Arabia and the United Arab Emirates. World oil supply in 2022 has the potential for a Saudi-driven gain of 6.2 mb/d if OPEC+ fully unwinds its cuts. We have raised our global demand estimates by 200 kb/d for 20 – resulting in growth of 5.5 mb/d and 3.3 mb/d, respectively – due to softer Covid restrictions. In 1Q22, demand is set for a seasonal decline, exacerbated by more teleworking and less air travel. While the number of Omicron cases is surging worldwide, oil demand defied expectations in 4Q21, rising by 1.1 mb/d to 99 mb/d.
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