Separation is difficult to pull off, but global oil markets do it anyway.
Oil breaks into stochastically overbought areas, making up for lost momentum taken away by Omicron scandals. Growing fears about the oil shortage are creeping in again as OPEC fails to deliver and despite the promises of higher US production, the balance between supply and demand just doesn’t work out.
Even the offer that was reported yesterday evening does not add up and is ignored by the marketplace. In fact, sentiment is getting so bullish that Pioneer Natural Resources (NYSE :), a large oil producer, are removing its hedges because they have more confidence in a very strong oil market.
The EIA also recognizes the risk of rising prices by increasing its demand estimate and price forecast by more than 7% compared to its last December report. Spot prices reported by the EIA averaged $ 71.00 per barrel in 2021, and we forecast that Brent prices will average $ 75 / b in 2022 and $ 68 / b in 2023.
The American Petroleum Institute’s report was largely ignored after reporting an incredible 10.86 million barrels of gasoline inventory surge last week, which coincided with reports from GasBuddy showing gasoline demand has fallen dramatically. But at the same time, one has to wonder if this build is reflecting the demand that is just falling off the map, or if it’s just a variance.
The futures markets currently believe that it is some kind of divergence and prices are actually moving up. In fact, the figure contained more gas venting components than actual finished gas, so the market is taking gas for a ride.
The EIA reported that retail gasoline prices in the US averaged $ 3.02 per gallon in 2021, compared to an average of $ 2.18 / gallon in 2020. We are forecasting gasoline prices averaging $ 3.06 / gallon. Gallon in 2022 and $ 2.81 / gallon in 2023. U.S. diesel fuel prices averaged $ 3.29 / gallon in 2021, compared to $ 2.56 / gallon in 2020, and we predict that diesel prices will average $ 3.33 / gallon in 2022 and $ 3.27 / gallon in 2023.
The bigger concern may have been the raw bid draw. There were some people who believed that crude oil inventories were going to rise, but a 1.077 million barrel drop plays with fears that global inventories are falling much faster than anyone had thought.
The Energy Information Agency (EIA) announced that its estimates of global liquid fuel inventories have decreased by an average of 1.4 million barrels per day (b / d) in 2021, compared with inventory growth of 2.1 million barrels per day Day in 2020. According to the forecast, global oil stocks will rise at a rate of 0.5 million b / d in 2022 and 0.6 million b / d in 2023.
Indeed, this is one of the reasons the Energy Information Administration had to raise its demand forecast and price forecast for oil in its press release yesterday. The EIA forecast that global petroleum and liquid fuel consumption will average 96.9 million barrels per day in 2021, an increase of 5.0 million barrels per day from 2020, when consumption fell significantly due to the pandemic. We expect global liquid fuel consumption to increase by 3.6 million barrels per day in 2022 and 1.8 million barrels per day in 2023.
also breaks. EBW Analytics reports that a widening and deepening cold spurt in January caused the NYMEX front month to climb to six-week highs, dwarfing the 200-day moving average. North of $ 4.00 / MMBtu, the price inelasticity of short-term demand creates the potential for significant further gains without loosening the supply / demand balance.
January 2022 is projected to be the coldest month since the 2014 polar vortex, with higher demand per gHDD, lower freeze-offs, and LNG feed gas, all of which create the potential for the recordings. In the next five weeks, the storage surplus of 96 billion cubic feet compared to the five-year average is expected to turn into a deficit of 200 billion cubic meters – another rising potential.
After the February contract rolls off the board and March takes over as the front month, downside pressure is likely to continue to emerge. However, the downside has decreased significantly as a result of the short-term tightening.
The EIA also recognizes the growing importance of natural gas as a fuel for America, and it should be the first fuel for an energy transition. The EIA reports that US electricity generation from natural gas averaged 37% in 2021, and we expect it to average 35% in 2022 and 34% in 2023.
Our forecast for the share of natural gas as a generation fuel is decreasing mainly due to the increased generation from new renewable energy generation capacities. The average power generation share of coal rose to 23% in 2021 due to higher natural gas prices, but we expect it to decline slightly over the next two years, averaging close to 22% in 2022 and 2023. We assume that the share of nuclear energy in production will remain 20% over the next two years.
We assume that power generation capacities from renewable energy sources will continue to grow in 2022 and 2023. Our forecast includes both wind and solar capacity growth, with solar capacity growing faster.
The extreme drought conditions in the west could ease somewhat next year, and we forecast that the share of US hydropower generation will increase from 6% in 2021 to 7% in 2022 and 2023. The US retail electricity price for the private sector in our forecast will average 14.2 cents per kilowatt hour in 2022, which is 4% above the average retail price in 2021. Projected home prices will remain relatively the same in 2023.
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