Recovering global oil demand could send oil prices to $100 a barrel at some point at the end of 2022, despite COVID challenges to demand this coming winter, according to one of the world’s largest independent oil traders, Trafigura, Report informs referring to oilprice.com.
“Not just the price, but the level of backwardation we are seeing is telling us the market is hungry for oil,” Saad Rahim, chief economist at Trafigura, said.
Oil demand worldwide has recovered enough from the coronavirus and the variants this year to put the oil market in a “much healthier place,” Rahim said.
"We could see $100 oil next year, probably at the back end, “if conditions are right,” Trafigura’s chief economist said at the Argus forum.
In the middle of this year, before the Delta variant hit the US and economies in Asia and Europe, the world’s largest commodity trading groups, including Trafigura, said they would not rule out crude oil prices, hitting $100 a barrel.
Although oil may not be headed to a new supercycle, prices still have room to rise from current levels because of a strong demand rebound and expected tightness in supply, top executives at the commodity traders told the FT Commodities Global Summit in June.
There is a chance for $100 oil, Jeremy Weir, chief executive officer at Trafigura, said back then.
“You need higher prices to incentivize… and also maybe to build on the cost of carbon in the future as well. You also need to attract capital in the business,” Weir told the online debate.
Market conditions are pointing to demand recovery. The volume of floating stocks globally has normalized, and US inventories are below the five-year average, Rahim said.
It was earlier reported that US crude oil inventories fell by 3.481 million barrels last week, with a projected decrease of 2.44 million barrels. At the same time, gasoline reserves decreased by 3.475 million barrels (an expected decrease of 1.067 million barrels), distillate stocks - by 2.555 million barrels (1.19 million barrels). This is evidenced by data from the Energy Information Administration (EIA) of the US Department of Energy.