Global oil production is expected to rise more quickly than demand in 2022, and this should lead to lower prices of crude oil and petroleum products than in late 2021, according to the U.S. Energy Information Administration (EIA).
The EIA released Tuesday (Dec. 7) its December Short-Term Energy Outlook that shows international benchmark Brent crude oil prices are expected to be an average of $70 per barrel in 2022. The prices fell to $70 per barrel by the end of November but averaged $81 per barrel in the month. Responses to the new COVID-19 variant could lead to a short-term decline in demand for petroleum products.
“This is a very complicated environment for the entire energy sector,” said EIA Acting Administrator Steve Nalley. “Our forecasts for petroleum and other energy prices, consumption and production could change significantly as we learn more about how responses to the Omicron variant could affect oil demand and the broader economy.”
The release of crude oil reserves by the United States and other countries might have contributed to a decrease in Brent crude oil prices in November, and that could contribute to lower prices in 2022.
Following are other highlights in the Short-Term Energy Outlook:
- U.S. gasoline prices are expected to fall as crude oil production rises over the next year. The average price is projected to fall to $2.88 per gallon in 2022. In November, the price rose to an average of $3.39 per gallon, the highest monthly average since September 2014.
- Demand for coal has risen as it becomes more competitive with natural gas for electricity generation. U.S. coal production is expected to rise by 16% to 621 million short tons in 2022, from 2020 levels. Over the same period, coal inventories in the electric power sector are projected to fall by more than 50%.
Link here for the Short-Term Energy Outlook.