BAKU, Azerbaijan, Oct.19
By Leman Zeynalova – Trend:
OPEC+’s decision to stick with a plan to raise oil output modestly and gradually, despite surging prices, was partly driven by concerns that demand could weaken over the winter, Trend reports with reference to the US JP Morgan Bank.
With OPEC already seeing a 1.4 mbd surplus in 2022, there is also a concern that a further boost in output could risk building inventories above the five-year average once again in 2H22, the Bank believes.
“We agree with the dismissal of larger supply hikes. While we see the market as fundamentally tight for the rest of 2021, our global balance should swing into a ~1 mbd surplus in 2022. On the demand side, we expect the global oil market to recover fully by the middle of next year, rising 4.2 mbd yoy. However, world oil supply is projected to rise 6.5 mbd as US output bounces back, OPEC+ continues to unwind cuts and output is restored and new projects ramp up outside of the US/OPEC+ block. Out of our 6.5 mbd total liquids growth in 2022 supply, OPEC+ members account for 4.5 mbd (3.5 mbd of crude), the US accounts for 1.5 mbd, and Canada, Brazil, Norway and Guyana will add another 450 mbd,” reads the JP Morgan report.
The report shows that reflecting this loosening in the global oil market, OECD commercial oil inventories will likely build in 2022, offsetting the extended period of inventory draws that are expected to last until the end of 2021.
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