Brent recently traded at $72.96, up 0.33%. It has soared 41%
year to date amid booming demand, with the global economy rebounding, and
constricted supply.
“OPEC+ is not immune to the impacts of underinvestment…. We
estimate 'true’ OPEC spare capacity in 2022 will be about 2 million barrels per
day (43%) below consensus estimates of 4.8 million,” write the analysts led by
Christyan Malek.
“While we believe a three-month pause to 400,000
barrel-per-day monthly increments is needed during the first half of 2022 to
balance the market (and potentially a cut pending impact of new COVID
variants), the group will struggle to deliver monthly growth of more than
250,000 barrels per day once reinstated.
“Our bottom-up field-by-field model reveals a total capacity
shortfall extending to 3 million barrels per day versus an OPEC+ target of 49.1
million barrels in the first half of 2024. This underperformance comes at a
critical juncture, as other global producers falter.”
Last week, US President, Joe Biden announced the release of
50 million barrels of oil from the country’s strategic petroleum reserves
stockpile in a move meant to quell rising gas prices at the pumps.
U.S. January crude futures dropped 13% from Wednesday
through Friday, ending last week at $68.15 per barrel. But they rebounded 2%
Monday to $69.60.
JPMorgan analysts said the market fall implied an
“excessive” hit to demand, while global mobility data, excluding China, showed
that mobility is continuing to recover, averaging at 93 per cent of 2019 levels
last week.
“So far we see no signs of demand weakening on (a) global
scale,” the JPMorgan analysts said.
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