Oil prices to fall as market returns to surplus in 2022

We expect a gradual normalisation in demand growth and a rebound in supply will start to weigh on oil prices from the fourth quarter. So far this year, growth in demand has outpaced supply, helping prices to hit multi-year highs, but we expect this dynamic to reverse as OPEC+ ramps up production.
Edward Gardner Commodities Economist
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OPEC continued to raise output by less than its target in December. However, the group is still steadily raising output, which is a key reason why we see the market moving into a surplus this year.

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Commercial crude stocks slumped last week, reflecting a partial recovery in demand. However, we think demand will remain under pressure as COVID-19 cases rise in the US and as economic growth slows.

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We see energy prices broadly falling this year as slower global economic growth should cool demand growth, but low stocks of many fuels mean prices will remain historically high and volatile for some time.

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Energy Data Response

US Weekly Petroleum Status Report

A jump in crude oil production led to the first stock build in eight weeks. However, with output still constrained and demand set to remain strong, stocks are likely to remain low for some time to come. This should support oil prices and raise pressure on OPEC+ to crank up production.

29 September 2021
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