Russia did not continue to increase its oil production in December 2021, despite the increase in production quotas of the OPEC + group. At the same time, group members in Africa are finding it difficult to increase oil production.
Development of the price of oil – The price of oil continued to rise in the last week: the price of BRENT oil rose to about $ 81.75 a barrel at the end of the trading day on 07/01/2021 and the price of a WTI barrel rose to about $ 78.90. This increase occurred despite the spread of the Omaricon variant in a large number of countries, some of which even began to tighten restrictions and in a limited number of countries the increase in morbidity even led to the imposition of a closure.
Global supply:
The OPEC + group decided at its meeting in early January to maintain the current policy of easing production quotas and the group will increase its members’ oil output in February by 400,000 barrels per day. Russia has not continued to increase its oil production in December 2021 relative to November 2021, despite the increase in OPEC + production quotas.
In Libya, the conflict between the government and regional tribes erupted spotty, after a period of silence following the signing of a ceasefire agreement, leading to damage to Libya’s large oil field. Of oil prices.
Global demand side:
Demand for fuel for cars in the U.S. dropped sharply in the week ending Dec. 31 from about 9.7 to about 8.2 million barrels. For declining demand for fuel used for transportation.
Demand for jet fuel also declined, but at a lower rate, reaching about 1.5 million barrels per day.
Fuel sales in India neared the end of 2021 to a level that was pre-spread of the corona virus. Sales of India’s three largest fuel retailers reached 6.45 million tonnes in December, a level only 1.6% lower than December 2019.
In China, transportation loads dropped earlier this year and are also expected to lead to a decline in fuel demand. This is against the background of the “zero corona” policy it adopts which has led to a significant tightening of the restrictions in the outbreak areas of the corona virus.
Natural gas economy:
The price of natural gas in the US (Henry Hub) has risen slightly in the last week to $ 3.81 per MMBTU. This is against the background of the winter season in which the demand for natural gas, which is also used for domestic heating, increases Dealing with gas shortages.
The price of European natural gas (TTF) was on the rise during the second and third quarters of 2021, which gradually strengthened, and in the last quarter of 2021 the price became very volatile. This volatility is due to the lack of certainty regarding regulatory approvals for the operation of the Russian gas pipeline Nord Stream 2 which has led to a reduction in natural gas exports from Russia to Europe which worsens with rising tensions between Russia and its neighbors, with an emphasis on Ukraine.
In the event of an unusual escalation in the conflict between Russia and Ukraine, EU and German regulators are expected to approve the operation of the Nord Stream 2 natural gas pipeline in 2022. Europe for American liquefied natural gas.
Expect medium term:
The OPEC + Group is expected to meet its decision to increase production quotas in February, in accordance with the decision made at its last meeting. Actual output, however, is expected to increase less than the increase in production quotas, as some members of the group have exhausted their production capacity for the time being.
The increase in liquefied natural gas exports from the US to Europe led to a slight increase in the price of gas in the United States (Henry Hub) and in contrast to a decrease in the price of European gas (TTF).
In spite of the various difficulties, Russia will operate the Nord Stream 2 gas pipeline sufficiently to Europe, a step that is very important for Russia’s economic activity, this will contribute to a further reduction in the price of European natural gas.
Oil futures indicate a certain decline in price in the first half of 2022 and a further decline during 2023.