Adedapo Adesanya
By Adedapo Adesanya
The Organisation of the Petroleum Exporting Countries (OPEC) said on Thursday that world oil demand might rise even more steeply this year.
But despite this positive forecast, the price of oil depreciated yesterday, with the Brent crude losing 14 cents or 0.2 per cent to trade at $91.41 a barrel and West Texas Intermediate (WTI) crude depreciating by 22 cents or 0.2 per cent to sell for $89.88 per barrel.
In its monthly report, OPEC noted that the global economy will post a strong recovery from the pandemic, a development that would underpin prices already at a seven-year high.
Tight oil supply has also given the drive to booming energy markets, and the report from the group showed that it undershot a pledged oil-output rise in January under its pact with allies.
In the report, OPEC said it expected world oil demand to rise by 4.15 million barrels per day this year, unchanged from its forecast last month, following a steep rise of 5.7 million barrels per day in 2021.
“Upside potential to the forecast prevails, based on an ongoing observed strong economic recovery with the GDP already reaching pre-pandemic levels,” the OPEC report said in a commentary on the 2022 demand outlook.
“As most world economies are expected to grow stronger, the near-term prospects for world oil demand are certainly on the bright side,” OPEC further said.
World consumption is expected to surpass the 100 million barrels per day mark in the third quarter, in line with last month’s forecast. On an annual basis, according to OPEC, the world last used more than 100 million barrels per day of oil in 2019.
OPEC took an early view that the effect of the Omicron coronavirus variant would be mild, and the report said it has not had as negative an economic impact as previous COVID-19 waves.
However, the market was pressured by the possibility of an aggressive and unforecast rate hike in the US following its highest inflation level in 40 years.
Also adding to the circumstances of the market, the US Dollar gave up some of its earlier losses and strengthened. A stronger greenback makes oil and other commodities more expensive for those holding other currencies.
The market will continue to watch the resumption of indirect US-Iran nuclear talks which if successful and leads to a deal could lift America’s sanctions on Iranian oil and ease global supply tightness.
