See surplus oil building throughout 2022: Julius Baer’s Norbert Rucker
Norbert Rucker, Head Economics and Next Generation Research at Julius Baer, believes confidence has returned to the oil market with the New Year as prices climb above the $80 per barrel level. “The petro nations’ decision to maintain their path of lifting supply restrictions and view of market tightness supports sentiment. We see the oil market in a transition phase where output growth exceeds demand growth as the post-pandemic recovery has largely run its course. We see headwinds to prices in the longer term, but acknowledge that tailwinds could prevail in the very near term,” he said.
“We are rather in the camp of seeing a surplus building throughout 2022 as supply growth exceeds demand growth. In North America and Europe, oil demand is back at cruising speed i.e. stagnant. In China, with the coal supply and energy crunch largely having eased, and the real estate sector under pressure, oil use looks unlikely to swell much. Meanwhile, supply continues to grow incrementally given the healthy levels of shale drilling activity and ongoing easing of the petro-nations output restrictions. The oil market is likely in a transition phase where storage shifts from tightening towards easing. Sources of uncertainty include the pandemic, ongoing supply chain hiccups and especially oil politics given the underlying shift of fundamentals. Against this backdrop, we see lower prices in the longer term,” he added.
