OPEC sees more demand in 2022
Market analyst – IFC Markets
Yesterday, US crude oil prices continued their way up by a 1.3% gain at the closing time, to touch a weekly high at its daily high above $70.73. Today this rally continued its way after a bit of correction to touch yesterday high. With this price in mind, Oil prices increased more than 14.7% during last month after they fell to $61.7.
This increase in the prices came after OPEC’s monthly report and ahead of today’s IEA Monthly Report. According to the published report, OPEC maintained its forecast of global oil demand growth in 2021 unchanged at 5.96 million barrels per day. By 2022, the organization expects that global oil demand will be stronger, they increase demand expectations by 980,000 barrels to 100.8 million barrels per day. On the supply front, “Ada” and “Nicholas” hurricanes are expected to continue to affect crude oil production and further expand the gap between supply and demand. So far we know since two weeks ago that the “Ada” hurricane hit the Gulf of Mexico area, production has shut down by 48.56%, or 883,800 barrels per day.
Increasing oil prices also can lift inflation, if supply could not balance itself with demand. According to the latest household survey results released by the Federal Reserve Bank of New York, US consumers’ inflation expectations for the next one and three years increase by 5.2% and 4.0% respectively in August, the highest level since the survey began in 2013. Moreover, about 25% of the respondents believe that the three-year inflation will reach 7.8%, which is “non-temporary inflation.” Today, the market will also pay attention to the US August CPI data. It is expected that the monthly rate and annual rate of the data will be 0.4% and 5.3%, respectively, and the previous values of the two data are 0.5% and 5.4%.
On the other hand, we should not forget about the virus situation and its possible effect on markets. Due to the recent rebound in the pandemic, demand in the oil markets, especially in Asian countries had some sort of weakening signal in the past two months. So in our calculation, we have to remember that need to follow the COVID-19 news and its effects as well, especially bt entering the cold seasons.
From the technical point of view, $69 is the key support, where the trend also changed. This is the support for the strong bullish and as long as asset trading is above this level, bulls have full market control.
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