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

Web DeskWeb Editor

02nd Sep, 2021. 12:28 pm

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, Arab News reported.

The global oil production could rise by almost 2 million barrels/day next year, Francisco Blanch, Bank of America’s head of global commodities and derivatives research, said on Bloomberg Television.

The Opec+ is expected to pump an extra 5.9 million barrels/day from now till next September, and in addition, 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 barrels/day increase in [the] global output, with the US taking the lion’s share of that oil,” he told Bloomberg.

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

Meanwhile, the US crude inventories fell 7.2 million barrels last week to 425.4 million barrels. The US crude oil inventories are around 5 per cent below the five-year average for this time of the year.

The US gasoline rose 1.3 million barrels last week to 227.2 million barrels, the US gasoline is around -2 per cent below the five-year average for this time of the year.

Iraq’s total oil exports for August rose to 3.054 million barrels/day from 2.9 million barrels/day in the previous month, the oil ministry said in a statement.

The 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.

The global oil demand is seen growing 5.8 million barrels/day to 6 million barrels/day this year, Novak told reporters, adding that he saw the global oil market fully restored next year.

The Chinese independent oil refiners returned to the physical market in recent weeks, aiding a recovery in the Asian demand after a crackdown had spurred buyers to scale back the activity.

The demand for the jet-fuel 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 the 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 Company said 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 per cent, to $70.70/barrel by (15:07 GMT). The US West Texas Intermediate crude fell $1, or 1.5 per cent, to $67.50/barrel

Adsence 300X250