TUE, 16 AUG, 2022-theGBJournal| Last week, the price of Brent rebounded, gaining 3.40% w/w to settle at US$98.15/bbl. As a result, Brent is up 26.19% year-to-date and has traded at an average of US$104.53/bbl, 47.45% higher than the average of US$70.89/bbl in 2021.
Oil prices managed to end the week positive as the market reacted to lower-than-expected US Consumer Price Index (CPI) data which raised hopes of a possible slowdown in monetary policy tightening by the Federal Open Market Committee (FOMC) in its September meeting. In addition, pipeline supply disruptions in Europe aided oil prices.
However, the oil market is likely to experience more volatility in the wake of an uncertain demand outlook as the Organisation of the Petroleum Exporting Countries (OPEC), and the International Energy Agency (IEA) hold diverging views on demand expectations for the rest of the year.
OPEC lowered its demand forecasts for 2022, by another 260,000 b/d on the back of recessionary pressures, whilst the International Energy Agency has increased its outlook for 2022 by 380,000 b/d to 2.1 million b/d, and effectively arguing that elevated gas prices will be incentivizing higher crude utilization.
Nevertheless, in this exceptional year for oil prices, we maintain that prices are likely to remain above the US$73.00/bbl set in Nigeria’s government budget.
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