The COVID19 Omicron variant poses a risk to global oil demand, according to the US Energy Information Administration (EIA), which slashed its global oil consumption predictions for 2021 and 2022. Here are a few major takeaways from the forecasts.
- According to the EIA’s December Short-Term Energy Outlook (STEO), global oil consumption will average 96.91 million barrels per day (bpd) this year, down from last month’s prediction of 97.53 million bpd.
- World petroleum consumption is expected to increase by 3.7% in 2022 compared to 2021, up from the 3.4% growth forecast in November. Global oil consumption is expected to rise by 3.5 million bpd in 2022 compared to 2021, according to the EIA.
- The EIA’s projection of average world oil demand in 2022 has been revised down to 100.46 million bpd, down from the previous estimate of 100.88 million bpd in the STEO.
- The EIA cut its prediction for global oil demand for this quarter and the first quarter of 2022, owing in part to newly announced travel restrictions in response to Omicron variant breakouts.
- Since the third quarter of 2020, global oil reserves have been depleted by 1.7 million bpd on average, after five consecutive quarters of demand exceeding supply. However, this quarter’s stock draws are expected to drop to 900,000 bpd.
- Brent Crude prices are expected to average $71 per barrel in December and $73 per barrel in the first quarter of 2022, according to the EIA. Brent is predicted to average $70 per barrel for the entire year of 2022.
Some highlights from the statement:
“The potential effects of the spread of this variant are uncertain, which introduces downside risks to the global oil consumption forecast, particularly for jet fuel.”
“The Omicron variant has introduced additional uncertainty into oil markets for the coming months, and this uncertainty is reflected in the recent increase in oil price volatility.”
“The forecast is subject to significant revisions.”
“With global oil stocks forecast to continue falling in December and with supply and demand moving into relative balance in 1Q22, we expect limited upward price pressure could emerge in the coming months.”
“For 2022 as a whole, we expect that growth in production from OPEC+, of U.S. tight oil, and from other non-OPEC countries will outpace slowing growth in global oil consumption, especially in light of renewed concerns about COVID-19 variants.”
/strong,%20which%20slashed%20its%20global%20oil%20consumption%20predictions%20for%202021%20and%202022.%20Here%20are%20a%20few%20major%20takeaways%20from%20the%20forecasts.img%20class=%20wp-image-4651%20aligncenter%20src=https://ibekachikwu.com/wp-content/uploads/2021/10/91e99840-d74a-44a1-bd60-f2e7cdc458e6-300x150.jpg%20alt=%20width=388%20height=194%20/ul%20liAccording%20to%20the%20EIA's%20December%20Short-Term%20Energy%20Outlook%20(STEO),%20global%20oil%20consumption%20will%20average%2096.91%20million%20barrels%20per%20day%20(bpd)%20this%20year,%20down%20from%20last%20month's%20prediction%20of%2097.53%20million%20bpd./li%20liWorld%20petroleum%20consumption%20is%20expected%20to%20increase%20by%203.7%%20in%202022%20compared%20to%202021,%20up%20from%20the%203.4%%20growth%20forecast%20in%20November.%20Global%20oil%20consumption%20is%20expected%20to%20rise%20by%203.5%20million%20bpd%20in%202022%20compared%20to%202021,%20according%20to%20the%20EIA./li%20liThe%20EIA's%20projection%20of%20average%20world%20oil%20demand%20in%202022%20has%20been%20revised%20down%20to%20100.46%20million%20bpd,%20down%20from%20the%20previous%20estimate%20of%20100.88%20million%20bpd%20in%20the%20STEO./li%20liThe%20EIA%20cut%20its%20prediction%20for%20global%20oil%20demand%20for%20this%20quarter%20and%20the%20first%20quarter%20of%202022,%20owing%20in%20part%20to%20newly%20announced%20travel%20restrictions%20in%20response%20to%20Omicron%20variant%20breakouts./li%20liSince%20the%20third%20quarter%20of%202020,%20global%20oil%20reserves%20have%20been%20depleted%20by%201.7%20million%20bpd%20on%20average,%20after%20five%20consecutive%20quarters%20of%20demand%20exceeding%20supply.%20However,%20this%20quarter's%20stock%20draws%20are%20expected%20to%20drop%20to%20900,000%20bpd./li%20liBrent%20Crude%20prices%20are%20expected%20to%20average%20$71%20per%20barrel%20in%20December%20and%20$73%20per%20barrel%20in%20the%20first%20quarter%20of%202022,%20according%20to%20the%20EIA.%20Brent%20is%20predicted%20to%20average%20$70%20per%20barrel%20for%20the%20entire%20year%20of%202022./li/ulSome%20highlights%20from%20the%20statement:em“The%20potential%20effects%20of%20the%20spread%20of%20this%20variant%20are%20uncertain,%20which%20introduces%20downside%20risks%20to%20the%20global%20oil%20consumption%20forecast,%20particularly%20for%20jet%20fuel.”/emem“The%20Omicron%20variant%20has%20introduced%20additional%20uncertainty%20into%20oil%20markets%20for%20the%20coming%20months,%20and%20this%20uncertainty%20is%20reflected%20in%20the%20recent%20increase%20in%20oil%20price%20volatility.”/emem“The%20forecast%20is%20subject%20to%20significant%20revisions.”/emem“With%20global%20oil%20stocks%20forecast%20to%20continue%20falling%20in%20December%20and%20with%20supply%20and%20demand%20moving%20into%20relative%20balance%20in%201Q22,%20we%20expect%20limited%20upward%20price%20pressure%20could%20emerge%20in%20the%20coming%20months.”/emem“For%202022%20as%20a%20whole,%20we%20expect%20that%20growth%20in%20production%20from%20OPEC+,%20of%20U.S.%20tight%20oil,%20and%20from%20other%20non-OPEC%20countries%20will%20outpace%20slowing%20growth%20in%20global%20oil%20consumption,%20especially%20in%20light%20of%20renewed%20concerns%20about%20COVID-19%20variants.”/em){kind=link}