Thread by @anasalhajji

Thread: General comments & forecasts for the global oil market in 2022. Constructive comments are welcome. If comments don't fit your books, just ignore them.

1-13 The oil market will be tighter than forecasts, especially relative to OPEC’s forecast. No major inventory build.

2- The biggest surprise might come from increased demand for oil in the oil-producing countries themselves. That is a double-edged sword; BULLISH.

On the other side, if #COVID19 & its varients come back with vengeance: lockdowns, inventory build, etc.. OPEC+ is expected to react

3- Average oil prices for 2022 will be higher than that of 2021, but prices will be range-bound, even when China refills its SPR.

No $100 oil under normal circumstances. Possible under certain conditions. #Oil #OPEC #OOTT #China

4- China's threshold for use of SPR is 30 days of $72/b (Brent) (earlier calculations showed $75).

US threshold for withdrawal from SPR is 50 days of $78 WTI.

OPEC+ threshold? Ok, not now!

The above is subject to debate. They are calculated based on past events. #Oil #Biden

5- Sharp declines in oil prices on certain days are expected (a trigger followed by a delta-hedging effect). This is becoming more common with shale companies hedging at higher prices. These days have become a great buying opportunity.
#Shale #Oil #Permian #Texas

6- US oil production will increase but will be lower than OPEC forecasts. This will leave big room for several OPEC+ members to increase oil production without inventory build and lower oil prices. #Oil #OPEC #OOTT

7- The oil sector will outperform. (Very bullish on Canadian oil stocks & some US shale names).

- Oil service companies will do well, especially internationally.

- Oil majors that went green in the last two years will show their true colors in 2022 😂

8- Sales of electric vehicles will barely meet bullish expectations. Watch governments winding down support for EVs, especially in Norway and China.

- Trends favoring crossovers, SUVs, and trucks will continue whether ICE or EVs.

#ElectricVehicles

9- OPEC, IEA, EIA, and others will revise up their long-term oil demand growth as we go. They are already realizing the cold reality of the energy transition and carbon neutrality.
Remember, climate change leaders are the biggest users of petroleum products!
#Climate #Carbon

10- ESG will lose some relevance as companies & investors have already adjusted & used to it.

- We will see more evidence of ESG and carbon neutrality becoming more of accounting games. Will the popular press expose them?
#ESG #Media #Climate #Carbon

11- A deal with Iran is becoming irrelevant to market balances in terms of impact, especially in the short run. The world needs Iranian oil at full capacity in 2023 & thereafter!

- Any escalation might lead to a major disruption of oil supplies. See the last statement in #3.

12- Power shortages or fear of power shortages around the world will be more common than ever. Oil will be affected in two ways:
1- Utilities that have oil-powered plants will restart them or increase their utilization
2- Private generation. SEE NEXT

13- If what we have seen this summer was just a trial for something larger this winter or this coming summer, and private generation becomes widespread, see the last statement in #3.

14- Does OPEC have enough spare capacity to meet the growing global oil demand in 2022?
YES
- What if we lose the Iranian oil or Libyan oil?
YES..but prices will rise anyway

- What if we lose both or a similar quantity?
We will be at the edge then.

Cheers and Happy New Year!