Oil rally hits hurdle on Omicron demand over Reuters

By Ashitha Shivaprasad

(Reuters) – Oil analysts have lowered their price forecasts for 2022 as a variant of the Omicron coronavirus causes headwinds to restore fuel demand and threatens to exceed supply as producers pump more oil, a Reuters poll showed on Friday.

A survey of 35 economists and analysts predicts an average of $ 73.57 a barrel in 2022, about 2% less than the $ 75.33 consensus in November. This is the first reduction in the 2022 price forecast since the August poll.

By 2022, an average of $ 71.38 per barrel is projected, compared to the previous month’s $ 73.31 consensus. [O/R]

“As we slow down growth in oil demand, supply growth continues and energy cuts are easing, we see an expansion of the oil market balance in 2022, so we expect prices to be lower than current levels,” said Julius Baer analyst By Norbert Rücker.

Brent benchmark crude prices, which currently sell for about $ 80 a barrel, are on track to make the biggest jump in a year since 2009 as fuel demand fell.

However, the new Omicron variant of coronavirus is spreading faster, and nations have tightened restrictions. Continuing the cuts could reverse the recovery in oil demand.

Global reopening will improve after overcoming the current rise in Omicron, said Edward Moya, a senior market analyst at OANDA, adding that oil prices are likely to remain volatile as OPEC + gradually raises traders.

The Organization of the Petroleum Exporting Countries and its allies, known as OPEC +, will meet on January 4 to decide on their production policy, after agreeing to maintain plans to increase production to 400,000 barrels per day.

“On the supply side, the OPEC + strategy, the US-Iran nuclear talks and the speed of US shale recovery will come into play, but demand will be secondary,” said DBS Bank analyst Suvro Sarkar.

Demand is expected to grow by 3.2-6.0 million barrels (bpd) per day in 2022.