2021 has been a year of many surprises for the oil and gas market, according to Tom Kloza, global head of energy analysis at Oil Price Information Service (OPIS) by IHS Markit.“Six months ago, it was difficult to foresee prices as strong as we are seeing at present. I was among those who probably underestimated the weight of the market, underestimated what the success might be with Covid in some of the western countries, and underestimated in particular the discipline of Opec and Opec+,” he said during a recent online event. “Looking at crude oil I can tell you that today the number of investment banks, the number of people with vested interests or without vested interests in this sector, is growing almost exponentially.”Reminiscent of 2007 and 2008, when oil prices moved well beyond any expectation, Kloza said while most were of the opinion that the price of oil would remain in the region of $70 per barrel per day, there were some analysts who were not ruling out the possibility of the price hitting $100 per barrel per day.“Global demand for oil is indeed spiking, albeit from depressed levels that go back to the 1960s and 1970s,” said Kloza. “Opec+ supply restraint has been incredible. Without self-imposed handcuffs, we’d be looking at an additional eight million to nine million barrels per day of oil availability. The Saudis and the shale producers are no longer seduced by higher prices. They may follow demand, but they do not wish to get ahead of it and bank on increases that may never arrive.”He said Covid-19 was still very much the global scourge that could turn things around within days, but looking forward a lot of optimism was baked into petrol demand expectations, with congestion returning in many key areas. Whilst the first half of 2021 was still seeing less driving, business and international travel, it was increasingly returning in the latter half of the year.According to the latest Opec report, crude oil prices surged by more than 12% in October, on the back of soaring energy prices in Europe and Asia. Strong oil market fundamentals, compounded by expectations of higher oil demand in the Northern Hemisphere winter months, further supported spot and future prices. Whilst global economic growth forecasts for both 2021 and 2022 remain unchanged at 5.6% and 4.2% respectively, Opec in November downgraded its global oil demand forecast by 160 000 barrels per day, citing weaker economic factors in China and India. This reining in of production brought the organisation under fire, especially as prices are surging.Demand for Opec crude was also revised slightly down to stand at 27.6 million barrels per day, around 4.9 million barrels per day higher than in 2020.According to the US Energy Information Administration (EIA), the short-term energy outlook, however, remains subject to heightened levels of uncertainty related to the ongoing recovery from the Covid-19 pandemic.
