Bets on the balance of supply and demand in the oil market despite the turmoil of Kazakhstan and Libya

Crude oil prices started this week’s trading with an expected rise, due to fears of supply disruptions in both Kazakhstan and Libya, which renewed fears of a tight oil supply, outweighing the corresponding concerns about demand in light of the rapid rise in new infections with the “Omicron” variable of the virus. Corona.
The producers in “OPEC +” continue to pump the monthly increase in supplies, amounting to 400,000 barrels per day, with the participation of 23 producers, but doubts surround the ability of some producers to meet their quotas in the production increase next February, while consumption of crude oil and fuel continues at good levels. Despite the high incidence of pandemic injuries, which appear to be less dangerous than previous waves.
And oil analysts told Al-Eqtisadiah, “There is strong confidence in the market, whether from “OPEC +” or from outside, which reduces the possibility of the “Omicron” variable affecting demand, while the turmoil in Kazakhstan caused a rise in energy as a result of concerns about crude oil exports from Kazakhstan”.
They stated that Kazakhstan is an important part of the “OPEC +” group and produces approximately 1.6 million barrels per day, noting that the crisis in Kazakhstan coincided with a decrease in production from Libya, in addition to the expectation that the “OPEC +” group will continue its monthly production increases of 400,000 barrels per day in next February, which raised price gains.
They pointed out that Libya’s average production of crude oil amounted to about 1.11 million barrels per day in 2021, compared to 360 thousand barrels per day and 1.05 million barrels per day in 2020 and 2019, respectively – according to the statistics of international institutions – noting that the country’s oil industry is facing enormous difficulties since The 2011 civil war, especially with armed attacks on major pipelines and production facilities.
In this context, Robert Stehrer, Director of the Vienna International Institute for Economic Studies, says, “The crude oil market is heading to recover from the epidemic crisis, and some are betting on a strong balance between supply and demand in the first quarter of this year, especially with the continued shrinkage of US oil stocks.”
He pointed to data issued by the US Energy Information Administration indicating that commercial crude oil stocks fell last week by 2.1 million barrels to 418 million barrels, the lowest level in three months and 8 percent less than the average for this time of year.
For his part, Rudolf Huber, a researcher in energy affairs and director of a specialized website, says, “The withdrawal from strategic oil reserves in the United States is expected to have less impact than previous expectations, and will not lead to an abundance of supply,” noting that the latest statistics indicate that 1.35 million barrels were withdrawn from the US Strategic Petroleum Reserve, which now stands at 594 million barrels, and US oil production has stabilized at 11.8 million barrels per day compared to 11 million barrels per day at this time last year.
He pointed out that the real demand crisis still revolves around the demand for jet fuel, as Gallup reported that 2021 witnessed the lowest level of air travel in the United States, and demand for gasoline fell last week to its lowest level since last February. Because of the repercussions of the variable “Omicron”.
In turn, Matthew Johnson, an analyst at the international consulting company Occera, says, “The OPEC + meeting last week did not bring any new or surprises to the market, as the group maintained plans to increase production by 400,000 barrels per day in next February, and broadcast a case confidence in the expectations of rapid demand growth, despite the current adverse factors, including the epidemiological situation and weak seasonal demand.”
He expected that demand would continue in the positive direction, especially in light of production additions in “OPEC +” supplies that do not disrupt the recovery of demand and face difficulties in achieving it, especially for African producers, and this supported crude oil prices well, especially since the recent turmoil in Kazakhstan did not lead It led to the resignation of its government, which raised concerns about the country’s oil production.
For her part, Nilea Hengstler, director of the Middle East Department at the Austrian Federal Chamber, says, “The demand for fuel is suffering in light of the epidemic situation, despite its less seriousness than previous stages, as data showed that US weekly gasoline stocks are growing at their highest levels in 21 months by the end of last year 2021.” .
She explained that the speculative activities on the rise in prices are growing in light of the strong US jobs data for last December, in addition to the turmoil in Kazakhstan that led to an increase in prices due to geopolitical risks in oil. It remains closed with the continued disruption and blockade of the main western oil fields in Libya.
On the other hand, with regard to prices, oil prices rose yesterday, as turmoil in Kazakhstan and Libya offset fears caused by the rapid global rise in infections with the “Omicron” mutant of the Corona virus.
Brent crude rose 19 cents, or 0.2 percent, to $81.94 a barrel at 1006 GMT, while US West Texas Intermediate crude rose 20 cents, or 0.3 percent, to $79.10 a barrel.
Oil prices rose 5 percent last week after protests in Kazakhstan disrupted train lines and damaged production in the country’s largest oilfield, while pipeline maintenance in Libya reduced production from 1.3 million barrels per day last year to 729,000 barrels per day.
Oil also drew support from rising global demand, which is not accompanied by increases in supply from the “OPEC +” group, which includes the Organization of the Petroleum Exporting Countries “OPEC”, Russia and allies.
And “OPEC” production in December rose by 70,000 barrels per day from the previous month, much less than the increase allowed under the “OPEC +” agreement of 253,000 barrels per day, which restored production that was reduced in 2020 when demand collapsed. In light of the COVID-19 closures.
On the other hand, the “OPEC” crude basket rose, and its price reached 82.14 dollars per barrel on Friday, compared to 80.80 dollars per barrel the previous day.
The daily report of the Organization of Petroleum Exporting Countries (OPEC) said on Monday, “The price of the basket, which includes average prices of 13 crudes from the production of member countries of the Organization, achieved its fourth consecutive rise, and that the basket gained about five dollars compared to the same day last week, in which it was recorded $77.97 a barrel.