Oil markets surplus to widen in 2022 as OPEC+ will push more crude

OPEC+ is expected to pump an extra 5.9 million barrels per day from now till next September

  
Workers load equipment onto a truck to be transported to a ship for a delivery to oil rigs, at a port on Malaysia's island of Labuan February 7, 2012.

Workers load equipment onto a truck to be transported to a ship for a delivery to oil rigs, at a port on Malaysia's island of Labuan February 7, 2012.

REUTERS/Bazuki Muhammad

RIYADH: The oil market, which is seeing a deficit this year, is expected to see a widening surplus next year on the back of OPEC+ supply hikes and more crude coming from the US.

Global oil production could rise by almost 2m b/d next year, Francisco Blanch, Bank of America’s head of global commodities and derivatives research, said on Bloomberg Television on Wednesday.

OPEC+ is expected to pump an extra 5.9 million barrels per day from now till next September, and in addition to this the bank expects to see “a fair amount of US supply,” Blanch said. “We think that next year there could be close to a two million barrel per day increase in global output, with the US taking the lion’s share of that oil," he told Bloomberg.

OPEC and its allies expect oil markets will continue to tighten this year even as they revive output, but then flip into surplus in 2022.

Blanch said oil demand will be limited until international travel picks up again. This might be hard to see as IATA’s data today showed the passenger travel market is far from going back to pre-pandemic levels.

Meanwhile, US crude inventories fell by 7.2 million barrels last week to 425.4 million barrels, US crude oil inventories are about 5 percent below the five-year average for this time of year.

US gasoline rose by 1.3 million barrels last week to 227.2 million barrels, U.S. gasoline is about -2 percent below the five-year average for this time of year.

Iraq’s total oil exports for August rose to 3.054 million barrels per day (bpd) from 2.9 million bpd in the previous month, the oil ministry said in a statement on Wednesday.

OPEC+, have fulfilled a goal of removing excess oil from the global market and it is now important to keep the market balanced, Russia’s top negotiator, Alexander Novak said.

Global oil demand is seen growing by 5.8-6 million barrels per day this year, Novak also told reporters on Wednesday, adding he saw the global oil market fully restored next year.

Chinese independent oil refiners returned to the physical market in recent weeks, aiding a recovery in Asian demand after a crackdown had spurred buyers to scale back activity. Jet-fuel demand in Asia suffered a blow last month as the delta coronavirus variant flared, prompting airlines to cut services.

Reviving Louisiana refineries shut by Hurricane Ida could take weeks and cost operators tens of millions of dollars in lost revenue as water and electrical power are slowly restored, analysts said this week.

Abu Dhabi National Energy Co. said on Wednesday it could sell some or all of its oil and gas assets as part of a broader strategic review.

Brent crude fell 93 cents, or 1.3 percent, to $70.70 a barrel by (15:07 GMT). US West Texas Intermediate crude fell $1.00, or 1.5 percent, to $67.50 a barrel.

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