Unrest in Kazakhstan, Outages in Libya Push Market Higher
January 7, 2022
The energy markets were higher again in yesterday’s trading pushed higher by the civil unrest in Kazakhstan, which producers 1.6 million BPD of crude oil, and due to major oil production outages in Libya. Prices were up for the fourth day in a row despite downward pressure from the bearish US DOE inventory report and OPEC+ plan to add another 400,000 BPD in February 2022.
Reports out yesterday said that OPEC+ members only increased production by 70,000 BPD in December. This might be a sign of the underinvestment in the oil and gas sector across the globe that is a concern moving forward if and when demand recovers. This also is a concern as OPEC+ for the last several months has approved their plan to add 400,000 BPD each month but may not be able to make it happen. This could lead to lower supply and support prices.
There are a lot of bullish outlooks out there in the market and they seem to keep traders pushing the button. Goldman Sachs’ global head of commodities research, Jeff Currie, said the bank is extremely bullish on commodities, amid a supercycle that has the potential to last for a decade.
Credit Suisse raised its oil price forecast for 2022 on expectations that supply will be tighter than expected while demand will improve if the spread of the Covid-19 variant is brought under control.
Morgan Stanley said the oil market could see simultaneously low inventories, low spare capacity, and low investment levels by the second half of the year.
Nonfarm payrolls rose by 199,000 in December, far fewer than the 422,000 estimates.