2022-01-10 • Updated
Predicting oil prices is a difficult job at the best of times. Still, it is increasingly difficult as COVID-19 and its variants continue to suspend consumers' plans and disrupt the balance between oil demand and supply. In addition, governments are also working to dismantle the current global energy system and shift to clean energy. All this puts oil prices and energy companies under the fog of uncertainty.
We expect crude oil prices to decline in the coming months, as it appears that supply will outpace demand, and we will find a surplus that turns things upside down. However, this does not mean that oil will not continue the rally that began late last year in 2022.
The potential failure to revive the Iran nuclear deal, the expected return of higher oil demand during the summer season, and the inability of OPEC+ to commit to pumping the agreed on amounts of supplies due to slowing production may push oil prices up.
Prices will begin to rebalance in the first quarter of 2022. According to Energy Information Agency (EIA), the average price of Brent crude will average $70 a barrel during 2022, according to Energy Information Agency (EIA).
The International Energy Agency (IEA) has forecasted that the global oil supply will exceed demand this year.
Global oil supply is expected to increase by 6.4 million barrels per day in 2022, compared to 1.5 million barrels per day in 2021. According to IEA, global demand will expand by 3.3 million barrels per day in 2022, compared to 5.4 million barrels per day in 2021.
According to the agency's report, the first quarter of 2022 could see a surplus of 1.7 million barrels per day and grow to 2 million barrels per day in the second quarter of 2022.
This surplus may push oil prices to calm down a bit and return to levels of $70 a barrel during this period.
Oil prices may be at risk of dropping to $60 during the coming months due to the slowing demand associated with Omicron, and its effects on economies, production, aviation, and travel. This will happen if:
The oil price may collapse to $60 a barrel. However, it will be an excellent opportunity to buy because the long-term trend will be bullish.
As global economies reopen from the pandemic, oil demand may exceed global supply. However, forecasts of an oversupply in the first quarter of 2022 will disappear for good, as OPEC and its non-OPEC allies led by Russia can still not deliver the planned 400,000 BPD increase each month.
Excess supply will turn into tight supply, as demand for oil fuel increases as economies recover, and the driving season begins during the summer. This may push prices to $85-$90 a barrel during 2022. In addition, OPEC+ is expected to maintain a tight grip on production, which is an excellent recipe for pushing prices higher.
The absence of Iranian oil in the market, as we wait for the possible failure of the Iran nuclear deal talks, may open the door for oil to break $100 a barrel, especially if inflation and rising production costs reach the oil services sector.
In the end, to sum it up, we expect oil to continue its rally, but it will calm down a bit, and prices will range between $73-$85 during the year. According to the circumstances, oil should witness some volatility between ups and downs.
Crude oil futures surged on Monday due to disruptions in Russian refining capacity caused by Ukrainian drone strikes and Moscow's decision to cut output to comply with OPEC+ targets. The West Texas Intermediate (WTI) contract for May settled at $81.95 a barrel, up $1.32, while the Brent contract for May settled at $86.57 a barrel, also up $1.32. Russia instructed...
Brent oil is currently on a bullish trend, facing resistance near $84 and supported by the 200-day EMA. Breaking above this level could lead to a climb towards $90. Short-term support is observed around $80, backed by the 50-day EMA. As summer approaches and travel increases, crude oil tends to benefit from seasonal patterns. Despite temporary setbacks, buying...
Amid uncertainty driven by geopolitical events, oil prices surged to record highs. However, a correction in oil prices is observed with a gradual improvement in the situation in the Middle East and an increase in demand. The question facing investors is whether there are prerequisites for further price growth or if everything depends on the dynamics of the political landscape. In this article, we will explore the impact of recent events on the global oil market and the prospects for developing this crucial commodity sector.
Jerome H. Powell, the Federal Reserve chair, stated that the central bank can afford to be patient in deciding when to cut interest rates, citing easing inflation and stable economic growth. Powell emphasized the Fed's independence from political influences, particularly relevant as the election season nears. The Fed had raised interest rates to 5.3 ...
Hello again my friends, it’s time for another episode of “What to Trade,” this time, for the month of April. As usual, I present to you some of my most anticipated trade ideas for the month of April, according to my technical analysis style. I therefore encourage you to do your due diligence, as always, and manage your risks appropriately.
Bearish scenario: Sell below 1.0820 / 1.0841... Bullish scenario: Buy above 1.0827...
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