Confusion in the oil markets with “conflicting expectations”

Confusion in the oil markets with “conflicting expectations”

Saudi production at its highest level in 27 months

Friday – 14 Muharram 1444 AH – 12 August 2022 AD Issue No. [

Yesterday, oil markets faced mixed expectations for both OPEC and the International Energy Agency on demand growth this year (Reuters)

London: “Middle East”

Oil markets were confused on Thursday in light of the interpretation of conflicting expectations from both OPEC and the International Energy Agency on demand growth this year, and while the former reduced its future vision, the latter expected cautious growth, leaving markets in a state of confusion over the future.
Oil prices fluctuated on mixed views yesterday, with Brent crude futures up $1.12, or 1.15 percent, at $98.52 a barrel by 1250 GMT, after falling 0.1 percent in the morning. While West Texas Intermediate crude futures added $1.15, or 1.25 percent, to $93.08 a barrel, after also falling 0.1 percent in the morning.
However, last week’s rise in US oil inventories and the resumption of crude oil flows in a pipeline supplying Central Europe limited price gains. The U.S. Energy Information Administration said U.S. crude inventories rose by 5.5 million barrels last week, well above expectations for a 73,000-barrel increase.
OPEC data revealed on Thursday that Saudi Arabia’s crude oil production continued to rise on a monthly basis for the 16th consecutive month during the month of July, reaching its highest level in 27 months.
Total Saudi crude oil production, depending on secondary sources, increased by 158 thousand barrels per day during July compared to the previous month; The Kingdom recorded the highest increase in production at the level of the OPEC member countries in the past month.
The Kingdom’s total production of crude oil reached 10.714 million barrels per day during July, thus recording the highest level of production since April 2020, when it reached 12.007 million barrels per day. The Kingdom’s production increased from June’s production of 10.556 million barrels per day, compared to 10.427 million barrels per day in May 2022.
OPEC cut its forecast for global oil demand growth in 2022 for the third time since last April, attributing it to the economic impact of the Russian invasion of Ukraine, high inflation and ongoing efforts to contain the Corona virus pandemic. restrict. It said in a monthly report on Thursday that it expects oil demand to rise by 3.1 million barrels per day, or 3.2 percent, in 2022, 260,000 barrels per day lower than previous expectations.
In contrast, the International Energy Agency said Thursday that high summer temperatures and high gas prices are boosting the use of oil in power generation, which has increased demand; But it hides weaknesses in economies wracked by recession fears.
The Paris-based agency described the increase as a turning point in an energy market rocked by supply disruptions caused by sanctions on Russian oil and decades-old high inflation that had already begun to curb fuel consumption.
In its monthly oil report, in which it raised its forecast for demand in 2022 by 380,000 bpd, the IEA said: “Natural gas and electricity prices have risen to new record levels, spurring the shift from gas to oil in some countries has. “
The agency warned that “these exceptional gains, largely concentrated in the Middle East and Europe, mask relative weakness in other sectors.”
It pointed to a decline in the use of fuel in road transport in developed countries and a slowdown in growth towards the end of the year “in line with more negative economic conditions indicating a significant contraction in the second half of the year .”
The International Energy Agency said the recovery in air traffic will be one of the few bright spots for demand going forward. Much of the demand growth in 2022 is assumed to have occurred earlier in the year, with growth slowing from 5.1 million barrels per day at the start of the year to less than 100,000 barrels per day in the fourth quarter.
Meanwhile, global oil inventories surpassed their pre-pandemic highs in July, supported by higher-than-expected production from Russia, whose July exports fell by 115,000 bpd to 7.4 million bpd, a decline of 600 000, the International Energy Agency said barrels per day just since the beginning of the year.
After the Russian invasion of Ukraine on February 24, the IEA initially predicted a loss of three million barrels per day of Russian oil. Russian oil export revenues fell by $2 billion to $19 billion in July, mainly due to lower prices. The International Energy Agency noted that China has overtaken Europe as a major destination for Russian crude for the first time.

the scientist

International Economics

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