MOSCOW (MRC) -- The International Energy Agency (IEA) has upped its average Brent crude oil price assumption for 2022 to USD79.40 a bbl, but predicted a rally may ease off as prices that hit a three-year high last month push up global production, reported Reuters.
The Paris-based IEA said on Tuesday that much of the uptick in supply is due to come from the United States.
A hurricane battered the main US production and export hub in the Gulf coast in late August, but US output made up for half the increase in global oil production last month.
But the IEA said in its monthly report that US production, despite climbing, would not return to pre-pandemic levels until the end of next year. It is due to account for 60% of non-OPEC+ supply gains in 2022.
"The world oil market remains tight by all measures, but a reprieve from the price rally could be on the horizon ... due to rising oil supplies," the IEA said.
"Current prices provide a strong incentive to boost (US) activity even as operators stick to capital discipline pledges."
The IEA's price assumption reflects forward prices for Brent crude. The agency does not always include a reference to price assumptions in its report, but does so when it considers the assumption important to understanding its oil supply and demand forecasts, the agency said.
The IEA price assumption of USD79.40 a bbl for Brent in 2022 is USD2.60 higher than in the agency's last monthly report. The agency's assumption for 2021 is USD71.50 a bbl.
"Global oil demand is strengthening due to robust gasoline consumption and increasing international travel as more countries re-open their borders," the IEA said.
But it said an uptick in coronavirus cases in Europe, weaker industrial activity and higher oil prices could dent demand.
The IEA kept its outlook for oil demand growth largely steady at 5.5 MMbpd for 2021 and 3.4 MMbpd next year.
As MRC wrote previously, Japan's largest refiner ENEOS currently sees a 150% year-on-year increase in fuel oil demand from the power sector for winter, but can only meet up to a 100% surge, said ENEOS Holdings Chairman Tsutomu Sugimor Nov. 25.
We remind that in the first week of June, 2021, Eneos Corp restarted the 168,000-bpd No.1 CDU at its Kashima refinery, east of Tokyo, after it was shut on May 11 due to system trouble. The refiner, which is a unit of Eneos Holdings Inc, restarted the 105,000-bpd No.3 CDU at its Mizushima-B refinery, western Japan, in early June, 2021. The CDU was shut on Feb. 25 for turnaround.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,868,160 tonnes in the first nine months of 2021, up by 18% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,138,510 tonnes in January-September 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding statistical copolymers of propylene (PP random copolymers) decreased significantly.