WTI crude oil futures remain above $88 per barrel on Wednesday. The relatively high prices seem to be influenced by geopolitical tensions and limited global crude supplies. Today, OPEC+ will announce its decision to increase production.
Since the beginning of this year, the price of a barrel of WTI has increased by over 17 percent and is the highest in seven years. It also appears that demand for crude is on the rise as pandemic restrictions are lifted.
Baseline scenario: increase in production by 400 thousand barrels per day
Meanwhile, the group of major crude producers is expected to stick to its current policy of moderate output growth, citing the fact that the world is facing an energy shortage due to a miscalculated shift to greener fuels by consumer countries.
OPEC+ is expected to agree to a planned 400,000 barrels per day (bpd) increase in March, although January once again failed to meet production targets and thus saw less oil come to market than previously expected.
Goldman Sachs said in its note that there is, however, a chance of faster production growth from OPEC+ countries, given the pace of recent rapid price increases.
Oil prices forecast to fall, inventories to rise
According to the U.S. EIA, starting as early as the second quarter of 2022, the global oil market is expected to experience a situation in which supply will outstrip demand, which could affect the stabilization of prices or even their decline in the long term. According to the EIA and the Short-Term Energy Outlook, the average price of a barrel of WTI in 2022 could reach $71.32, and in 2023 it could fall to $63.50.
EIA forecasts global oil inventories could grow at a rate of 0.5 million bpd in 2022 and 0.6 million bpd in 2023. The agency expects global liquid fuel consumption to increase by 3.6 million bpd in 2022 and 1.8 million bpd in 2023. And average OPEC oil production could increase by 2.5 million bpd to an average of 28.8 million bpd in 2022 and an average of 28.9 million in 2023.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service)
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