By YANGE IKYAA
Crude oil spot prices rebounded in January, compared to the previous month, as oil futures markets surged.
This was supported by strong global oil market fundamentals amid dissipating fears about the impact of the COVID-19 Omicron variant and geopolitical risks, which raised concerns about near-term oil supply, said OPEC in its Monthly Oil Market Report for the month of February 2022.
“Consequently, the world GDP growth estimate for 2021 is revised up to 5.6% from 5.5% in the previous assessment“
The OPEC Reference Basket increased $11.03, or 14.8%, to settle at $85.41 per barrel in January, marking its highest monthly value since September 2014. Similarly, crude oil futures prices increased on both sides of the Atlantic, with the ICE Brent moving up $10.77, or 14.4%, in January to average $85.57 per barrel and NYMEX WTI rising by $11.29, or 15.7%, to average $82.98 per barrel.
As a result, the Brent/WTI futures spread narrowed by 52¢ to an average of $2.59/b. The market structure of all three crude benchmarks – ICE Brent, NYMEX WTI and DME Oman – strengthened significantly in January over the previous month, as market perception of the outlook for the supply-demand balance improved.
Hedge funds and other money managers turned more positive about oil prices, increasing net long positions to their highest level since last November. World Economy Results for 4Q21 have been reported for major economies, with particularly better-than-expected growth levels in the US and China.
Consequently, the world GDP growth estimate for 2021 is revised up to 5.6% from 5.5% in the previous assessment. Global growth for 2022, however, remains unchanged at 4.2%. US GDP was reported at 5.7% for 2021, while the growth forecast for 2022 remains unchanged at 4%.
Euro-zone economic growth for 2021 and 2022 remains at 5.2% and 3.9%, respectively. Japan’s economic growth forecast for 2021 and 2022 is unchanged at 1.8% for 2021 and 2.2% for 2022. China’s 2021 growth was reported at 8.1% and the forecast for 2022 remains at 5.6%. India’s forecast for 2021 is unchanged at 8.8%, while the 2022 forecast was revised up to 7.2% from 7% previously, taking into account the acceleration in growth levels in 2H21 and an expected carry-over into 1H22.
Russia’s GDP growth forecast remains at 4% for 2021 and 2.7% for 2022. Brazil’s economic growth forecast for 2021 is unchanged at 4.7% and remains at 1.5% for 2022. Key uncertainties remain the spread of COVID-19 variants and the effectiveness of vaccines, as well as the pace of vaccine rollouts worldwide. Moreover, supply chain bottlenecks and sovereign debt levels in many regions, together with rising inflationary pressures and the responses of central banks, also require close monitoring.
World oil demand growth in 2021 is revised up slightly by 17 tb/d, reflecting the latest data trends across the regions, to now stand at 5.7 mb/d. Both 3Q21 and 4Q21 figures for OECD Americas are revised higher, mainly as a result of the better performance in the US, confirming the upward revisions taken last month. Overall, non-OECD growth in 2021 increased by 3.1 mb/d while the OECD recorded growth of 2.6 mb/d. In the OECD, the US continued to be the major driver of oil demand, recording growth of 1.6 mb/d. In 2022, oil demand growth is expected at 4.2 mb/d unchanged from last month, with OECD and non-OECD projected to grow by 1.8 mb/d and 2.3 mb/d, respectively.
In the OECD, optimism arises from economic growth with the supportive effects of fiscal and monetary policies expected to more than offset the negative effects from Omicron on oil demand. Industrial activities are also anticipated to accelerate, boosting diesel demand.