NewYork January 12 2022: The US Energy Information Administration boosted its 2022 oil price outlook by nearly $5/b from last month Jan. 11 but sees those levels falling throughout the year as global supply outpaces demand.
EIA expects global oil demand to increase 3.62 million b/d year on year in 2022, up 70,000 b/d from last month’s Short-Term Energy Outlook. That would put global oil demand back above 2019 levels for the first time since the pandemic, by about 260,000 b/d.
“We expect that as crude oil production increases, inventories will begin to replenish and help push prices lower for gasoline, jet fuel, and other products in the short term,” said EIA Acting Administrator Steve Nalley.
Global oil demand growth would then slow to 1.75 million b/d in 2023, EIA predicted.
EIA increased its outlook for 2022 crude oil futures by $4.90/b from last month to $71.32/b for WTI and $74.95/b for Brent.
US gasoline prices will likely remain a pressure point for the Biden administration, given EIA’s expectation that they will average above $3.06/gal for 2022. That’s 18 cents/gal higher than last month’s outlook.
But the fuel prices will trend downward throughout the year, falling below $3/gal on a monthly basis by September, EIA said. The latest outlook has regular-grade gasoline prices close out the year at $2.77/gal in December.
Slow US oil recovery
US crude production is projected at 11.8 million b/d in 2022, up 640,000 b/d from 2021 but still below pre-pandemic output of 12.3 million b/d in 2019. EIA expects US output to top that level in 2023 at 12.41 million b/d.
S&P Global Platts Analytics expects the global oil market to be oversupplied in the first quarter but estimates OPEC+ sustainable spare production capacity will shrink to 800,000 b/d by June if it maintains its monthly quota rises, creating “an uncomfortably thin market buffer in the second half of the year.”
OPEC+ production increased in December but again fell short of its quotas, according to the latest S&P Global Platts survey Jan. 11. Fourteen of 18 members with quotas fell short of those targets, including largest producer Russia.
