Commodities Buzz: EIA Says Increases In Petroleum Inventories Globally Will Weigh On Oil Prices In 2022

13 Jan 2022 , 12:43 PM

The US EIA noted yesterday that crude oil prices will fall from 2021 levels. In the fourth quarter of 2021, the price of Brent crude oil, the international pricing benchmark, averaged $79 per barrel (b). EIA forecasts that the price of Brent will average $75/b in 2022 and $68/b in 2023. The declining prices are driven by a shift from global petroleum inventory declines during 2021 to inventory increases in 2022 and 2023. Global petroleum inventories decline when consumption is greater than production and increase when production is greater than consumption. In 2021, withdrawals from global petroleum inventories averaged 1.4 million barrels per day (b/d) and contributed to higher crude oil prices. These inventory draws resulted from petroleum consumption returning faster than petroleum production after the COVID-19 pandemic began in 2020. In 2022, it expects that petroleum production will increase and consumption growth will slow, leading to increases in petroleum inventories globally. EIA says that global petroleum production will increase by 5.5 million b/d in 2022, driven by production increases in the United States, OPEC, and Russia, which together account for 84%, or 4.6 million b/d, of the growth. It forecast increased tight oil production in the United States and gradually increasing crude oil production from OPEC+ (which includes OPEC members and Russia) will account for most of the increased crude oil production.

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