- Brent is trading c. $71/bbl in mid-December, flat against the end of November. The benchmark rose as high as $75.77/bbl once the market digested the OPEC+ decision to stick to its schedule
- The market initially priced in a worst case scenario for the omicron variant. Optimistic news on disease severity lifted prices before they fell again mid-month as restrictions returned to the OECD
- Our 2021 Brent annual average forecast is revised down to $70.49/bbl (-$0.81/bbl). We see prices rising in 2022 to $72.28/bbl (-$0.30/bbl on previous), though we still expect significant volatility and uncertainty around demand and OPEC+ decision-making
- With the year almost over, our 2021 demand growth forecast is unchanged at 5.54 million b/d. For 2022, the EIA and IEA expect demand growth in the region of 3.4 million b/d
- OPEC expects demand growth of 4.16 million b/d, but even this higher forecast would see the market significantly oversupplied across 2022
- As a consequence, we consider a deviation from the OPEC+ schedule of quota increases plausible in 1H22, even as the group struggles to produce at quota
- We see US LT...
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by Graham Walker // 20 December, 2021
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