Although OPEC is likely to continue to increase production by 40 million barrels per month/ But whether it can actually be done remains a question mark.
The theme of the oil market in 2021 is undoubtedly a significant recovery in demand and continued decline in inventories. On the last day of 2021, Brent crude oil futures are expected to gain 53% for the year, while WTICrude oil futures are expected to gain 57% of annual growth, which is the first increase since 2009 is the strongest year since oil prices surged by more than 70%.
Looking forward to 2022, OPEC is expected to continue to adhere to the current production increase plan at the meeting at the beginning of the year. However, judging from the recent situation, OPEC may Failure to meet production quota targets could become a major bullish driver in 2022.
OPEC meeting next week: expected to maintain production increase of 400,000 barrels per day
Foreign media quoted four sources as saying that as demand concerns caused by the Omicron variant have eased and oil prices have recovered, OPEC and its allies (OPEC+) is likely to stick to its existing plan to increase oil production modestly each month at next week’s meeting.
OPEC+will be held in1month4 span> day to decide whether to continue to increase 40 million barrels in2 month/ daily output, the latest step in a steady easing of last year’s record production cuts.
An OPEC+ source said:“Currently, I have not heard Any move to change direction.”A Russian oil source and two other OPEC+ sources It also said it does not expect to make changes to its production increase plan next week.
In2021Year12Month2At the last meeting on the same day, despite concerns that the release of crude oil reserves by the United States and the Omicron variant of the new coronavirus would cause oil prices to plummet, OPEC+ persisted 1 Plan to increase production by 40 million barrels of oil per day in January.
2021Year11month26 when reports of the new variant first emerged , benchmark oil prices plunged more than 10% to 72 dollars per barrel, but have since recovered to nearly 80USD, OPEC+ sources said, 2021 The decision in Decemberto continue increasing supply is correct. Another OPEC+ source said the results met expectations, referring to the market rebound since the last meeting.
Based on OPEC’s expectation of increasing production, many institutions predict that there will be oversupply in the first quarter of 2022. The International Energy Agency (IEA) in its 2021 year12 The latest oil market report in March stated that if OPEC+ continues to increase production, 2022 will be the first There will be a 170 million barrels/ day of oil surplus in the quarter, 202220222022 span>There will be a surplus of 200 million barrels/ days in the second quarter of 2020. IEA pointed out:
“Starting from2021December, global oil supply will exceed demand. It will cool down the market where demand exceeds supply.”
OPEC+Can production really increase as planned?
However, IEA is only based on the assumption that OPEC meets production quotas and does not consider the possibility that member countries can increase production as planned. In fact, it is still unknown whether OPEC can meet the production increase target. OPEC has been producing below its collective production target for the past few months and this is likely to continue in the coming months.
Analysts estimate that OPEC+ total average daily output will be about 65 below quota 7310,000 barrels/ day, the probability of this production shortage is 2022A major positive factor for oil prices in 2020.
According to analysis by Energy Research ServiceHFI research, Saudi Arabia, the United Arab Emirates and Kuwait have contributed to OPEC in recent months +Most of the export growth. HFI Research found that since 2021 year6 Since January, total crude oil exports from OPEC and Russia have increased by approximately 1.8 million barrels per day, with an average daily Monthly increase30million barrels/ day, lower than planned monthly increase40million barrels/day.
In the same period, the exports of Saudi Arabia, the United Arab Emirates and Kuwait 3 countries increased208.7Ten thousand barrels/ day, exceeding the total production increase of OPEC+.
On the contrary, Iraq and Russia, which have the largest production quotas, have seen their production decline in the past1 months. These two countries did not support it very much before. Production reduction.
Therefore, if you exclude Saudi Arabia, the United Arab Emirates, Kuwait, Russia and Iraq, the output of other member countries has been declining. Therefore, it may be difficult to increase production levels in the future.
In other words, OPEC’s current production increase is mainly supported by Saudi Arabia, the United Arab Emirates and Kuwait. These three countries are reducing their idle production capacity, laying a danger for the future, that is, when oil prices rise and supply increases Volatility is exacerbated by sudden disruptions.
In general, the decline in idle production capacity in the Middle East and the continued production cuts by OPEC oil-producing countries in Africa will support oil prices in 2022 , especially in Omicron is less disruptive to demand than expected. This is certainly the case, with demand for other oil products remaining resilient despite a surge in COVID-19 cases around the world. HFI Research noted on Wednesday:
“Just that weekEIA inventories dropped by nearly 360 million barrels , the oil demand in the United States in the past 4 weeks has just reached a record high in the same period”
HFI Research believes that the most likely outcome in 2022 is that the market realizes OPEC+Unable to meet its 40 million barrels/ day production quota. By the spring of 2022, this situation will become increasingly obvious. If oil inventories continue to decline, contrary to the IEA’s forecast, oil prices may experience a vicious rise.
�Contrary to IEA’s forecast, oil prices may experience a vicious rise.
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