Brent crude price closed the week higher at $94.44 per barrel

*Faisal Faeq

@FAISALFAEQ

Oil prices continued the upward momentum for the 6th consecutive week of the year.

Brent crude price closed the week higher at $94.44 per barrel, WTI closed the week higher at $93.10 per barrel.

Brent / WTI spread has significantly widened to $1.34 per barrel.

Speculators are back gradually and made the first increase n longs this year.

The latest figures from the Commodity Futures Trading Commission (CFTC) on February 8, 2022, showed that long positions on crude oil futures on the New York Mercantile Exchange (NYMEX) numbered 506,568 contracts, up by 492 contracts from the previous week (1,000 barrels for each contract).

The International Energy Agency (IEA) forecast oil prices to remain under upward pressure and are set for more volatility amid rising demand and inventories at multi-year lows.

IEA reported OECD industry oil stocks declined by a steep 60 million barrels in December at 355 million barrels lower than a year ago and at their lowest in seven years.

OPEC reported OECD commercial oil stocks down by 31.2 million barrels at 311 million barrels lower than the same time a year ago, 210 million barrels lower than the latest five-year average, and 202 million barrels below the 2015-2019 average.

The continuing decline in OECD commercial oil stocks for eight consecutive months in December also added strength to the market structure.

OPEC reported the market structure of the three main futures benchmarks strengthened in January, reflecting

stronger market fundamentals.

Refiners are extremely concerned about shrinking inventories and the price rise of prompt delivery Brent crude towards $100.

The physical SPOT barrels have further strengthened in a tight market that sends the market into steep backwardation, strongly buoyed by concerns about potential lower supply due to outages and geopolitical risks amid robust global oil supply and demand fundamentals.

The US Energy Information Administration (EIA) significantly raised its forecast of 2022 oil prices from prior estimates, Brent expected to average $82.87, up $7.92 from the prior month, and WTI to average $79.35, up $8.03 from last month.

EIA reported US shale crude oil in November 2021 increased by 87,000 bpd month-to-month to average 7.54 million bpd, which was 328,000 bpd higher than the same month a year earlier.

The EIA estimated global demand to increase by 90,000 bpd to 100.61 million bpd for 2022 and by 210,000 bpd to 102.48 million bpd in 2023.

*Energy Adviser (former OPEC and Saudi Aramco)