This week, international crude oil prices continued to rise. As of the 20th press release, Brent crude oil once exceeded US $89. At present, the oil price has reached the highest level in nearly seven years. It is mainly due to the tight supply, the expected continuous fermentation, the difficulty in increasing OPEC + production in oil producing countries, the continuous decline of commercial crude oil inventory in the United States, etc. in addition, the resurgence of geopolitical conflicts in the Middle East also raises the risk of supply interruption. In addition, the International Energy Agency (IEA) raised its oil growth forecast for 2022, and multiple profits made the oil price break the highs repeatedly.

At the macro level, under the background of the epidemic, the global inflation level continued to rise. In December 2021, the US CPI increased by 7% year-on-year, the highest level in 40 years. Under the pressure of inflation, the oil price further increased. Meanwhile, the Fed’s monetary normalization process is further put on the agenda. The market generally believes that the Fed will raise interest rates at least three times this year, and oil prices may face macro pressure in the future.

The most important reason for the rise in oil prices is the good supply side. First of all, OPEC + has consistently implemented a gradual production increase policy since 2020, with a monthly increment of 400000 B / D, which is relatively conservative. Moreover, some countries are facing difficulties in increasing production. On the one hand, OPEC + production is difficult to reach the target level, because the oil industry has not made the necessary investment in the past two years. On the other hand, the output of some member countries, such as Libya and Kazakhstan, fell sharply due to the impact of their own political turmoil. According to the International Energy Agency (IEA), OPEC + production in November was 650000 barrels / day lower than the target.

In addition, from the perspective of U.S. crude oil inventory, according to the inventory data released by the U.S. Energy Information Administration (EIA), crude oil inventory has fallen for seven weeks, and it is expected that the data to be released on Thursday evening will still decline. Previously released data showed that as of January 7, U.S. crude oil inventories fell by 4.6 million barrels to 413.3 million barrels, the lowest level since October 2018. Previously, analysts expected inventories to fall by 1.9 million barrels. Crude oil inventories remained low, further fuelling the expectation of rising oil prices.

On the demand side, fuel demand is still recovering. In the latest news, the International Energy Agency (IEA) raised its oil growth forecast for 2022. On Wednesday, the IEA said that the situation in the global oil market seemed more tense than expected. Surprisingly, the Omicron strain had little impact on demand, but caused supply interruption. IEA said in its monthly report that the global market supply is decreasing this year, and the oil demand is slightly higher than that of last month, which is expected to reach 99.7 million barrels / day, about 200000 barrels / day higher than that in 2019. In December 2021, IEA predicted that the oil demand in 2022 would be roughly equal to the level before the epidemic. IEA judged that the rising oil demand was caused by the shortage caused by the risk of supply interruption on the one hand, and the oil demand growth driven by the soaring natural gas price caused by energy shortage on the other hand.

In the future, the crude oil analyst of business society believes that in the short term, the tight balance of crude oil is difficult to ease, which will still be good for the oil price. The oil price is expected to break through $90 and move towards $100. The factors supporting oil prices are: first, OPEC +’s voice in controlling production continues to play a role; second, the resilience of demand growth; and then, the pressure from global high inflation. The first quarter may show a “high before low” trend. At the end of the third quarter, there was a demand for the return of oil prices. On the one hand, the supply continues to recover, including the gradual increase in OPEC + and the further increase in shale oil in the United States. On the other hand, under the influence of the epidemic, the demand side will also show a marginal diminishing effect. Overall, oil prices are easy to rise but difficult to fall in the short term.