A report issued by the joint technical committee of the “OPEC +” group yesterday expected a limited and short-term impact of the Omicron axis on the oil market. According to “Reuters”, the report said, “The impact of the new mutant omicron is expected to be mild and short-lived with the improvement of the global ability to deal with Covid-19 and the challenges associated with it.”
Oil analysts suggested that the price gains for crude would continue this week, due to the decline in fears of the risks of the “Omicron” variable from the Corona virus, in addition to the continued shrinkage of US oil stocks, which prompted Brent crude to record an annual increase, the largest since 2016.
And they explained to Al-Eqtisadiah that the meeting of energy ministers in the “OPEC +” group tomorrow will review market developments and review data on supply and demand and oil stocks, especially after the return of positive sentiment in the market, which suggests the scale of passing the monthly increase in the group’s production in February (February). 400 thousand barrels per day.
Analysts are inclined to the hypothesis that the “OPEC +” alliance will continue its oil production policy in the next few months, by taking a decision to maintain the monthly increase and add it to its collective share of production, noting that there are no indications or steps from producers to change the current course of oil supplies.
They stated that most of the spare capacity is in “OPEC” and in the Middle East, but this spare capacity needs maintenance, and maintenance means investment, pointing out that investments in oil production are becoming increasingly difficult, noting that American production is also going through the same crisis, as oil companies The US prioritizes returning money to investors rather than production growth, while the major oil companies are pumping billions into low-carbon energy, which means that the world may go through a few more difficult years in terms of energy security.
In this context, Ross Kennedy, managing director of QHE Energy Services, told the Economist, “market sentiment is constantly improving, and concerns about Omicron are declining despite the high infection rate, due to studies confirming the effectiveness of vaccines and the low risk of the variable, which was reflected price hikes at the end of last year.
He pointed out that recent developments have relatively facilitated the task of “OPEC +” producers at the meeting next Tuesday, as it has become unlikely to make changes to the current agreement and “OPEC +” will continue in its usual path, despite the announcement of the release of strategic oil reserves from oil-consuming countries led by The United States, which expands the supply glut.
For his part, Damir Tesperat, director of business development at Technik Group International, says, “Crude oil prices are likely to maintain the pace of gains, despite the weak seasonal demand in the first quarter of this year, in light of an improvement in demand levels and the continued movement of Mobility”.
He pointed out that “OPEC”, in its latest monthly data, expected an abundance of oil supply in the first quarter, but it is also confident in the recovery of demand, and therefore it maintained the level of monthly increases, which raised the astonishment of some analysts who expected a temporary halt in the monthly supply additions at last month’s meeting, explaining. “OPEC” is confident that demand has not yet been affected to the level that calls for stopping the increase of 400,000 barrels per day.
For his part, Peter Bacher, an economic analyst and specialist in legal affairs for energy, says that “volatile market conditions, uncertainty, and the difficulty of predicting the path and movements of the market made the OPEC + alliance leave the door open, and maintain a flexible approach to production,” explaining that discipline in adhering to agreed policies. Inside OPEC+ is the reason why the alliance has not responded to US calls for more oil production than planned.
He stated that the oil price gains, which were a prominent feature in 2021, imposed wide challenges on the work of “OPEC +”, as the gains represented a temptation that was always difficult to resist, especially for the economies more dependent on oil, and despite that, the producers committed to a limited increase that was agreed upon between All producers.
In turn, Arvi Nahar, an expert in oil and gas affairs at African Leadership International, explained that the “OPEC +” group has proven in the past two years its superior ability to deal with a turbulent market, and that it can be cautious in dealing with rapidly changing and widely affecting factors in market stability, This made the group more resilient to any future shocks.
And considered the most prominent challenges for the group in the current period is the oversupply, however, this will not represent a major challenge as it is seen as temporary until the current “Omicron” wave is overcome, amid expectations that it will not be as bad as the previous waves, adding that “most governments cannot Holds another long closure.
On the other hand, with regard to prices, at the end of last week, oil prices fell on Friday, but recorded their largest annual gains since 2016, driven by the recovery of the global economy from the recession caused by Covid-19 and restrictions adopted by producers, even as injuries rose to record levels around the world. .
Brent crude futures fell $1.75, or 2.2 percent, to $77.78 a barrel, while West Texas Intermediate crude futures fell $1.78, or 2.31 percent, to $75.21 a barrel.
Brent crude ended the year with an annual increase of 50.5 percent, its largest increase since 2016, while West Texas Intermediate crude recorded a 55.5% increase in the strongest performance since 2009, when prices jumped more than 70 percent.
It is noteworthy that the two crude contracts touched the highest level in 2021 in October, when Brent crude recorded $ 86.70 a barrel, the highest level since 2018, while West Texas Intermediate crude recorded $ 85.41 a barrel, its highest level since 2014.
On the other hand, the international “Baker Hughes” report on US drilling activities stated that the number of active drilling rigs in the United States remained unchanged this week, while maintaining the total number of rigs at 586, as oil prices remained relatively strong, despite the new wave. One of the cases of Covid-19 brought by the new “Omicron” variant of the coronavirus.
The report indicated that last week recorded an increase in the number of rigs by seven compared to the previous week, bringing the total number to 586.
The report stated that the total number of active rigs was 235 rigs, higher than the number of rigs at this time last year, when the oil industry was just beginning to recover from the worst strikes of the epidemic, yet it was still far from the rig numbers before the epidemic spread. . The report noted that oil production in the United States last week amounted to 11.8 million barrels per day, up from 11.6 million barrels per day in the previous week, the highest level since May 2020.
The report stated that US production is still on an upward trend, as oil prospectors remain cautious in their production growth plans, and more focused on returning cash to investors.
The report pointed out that the number of rigs in the Permian basin decreased by 1 this week, as the number of rigs in the nation’s second most productive basin, “Eagle Ford”, did not see any change in the number of active rigs, as the total number of rigs in the “Permian” now stands at 293, with A total of 44 platforms at Eagle Ford.
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