Weekly Oil Report: Lower Demand Claims Could Not Pull the Price Back

Oil prices increased at the end of the week despite forecasts about weaker demand in 2022. Reports, mostly by OPEC and IEA, show that there will be a lower demand for oil in 2022 since inflation is still rising. However, the reports could not suppress the prices and Brent closed at $111.19 and WTI closed at S110.16 on Friday. The IEA reported a weakening demand in its last oil report. Two months ago, the institute expected the world to confront a supply shortage due to the sharply rising demand. However, in its latest report, IEA has seen a shift in demand because of the rising inflation. It expects that the fast-paced inflation drives the demand lower gradually. The slower demand growth and rising production might also set a better situation to weather sanctions against Russia. OPEC and the American Petroleum Institute (API) warned about the possible risks of NOPEC (No Oil Producing and Exporting Cartels Act) legislation. The US senate approving the bill after two decades caused several oil experts and OPEC members to speak against it. OPEC members believe that if the bill becomes the law, the world can face $200 - $300 oil prices within the inadequate supply. API is also against such legislation due to the unintended harms that it might cause to the US gas and oil industries. Although most OPEC members had production increase during April, they failed to fulfil the agreement on the supply. According to OPEC’s Monthly Oil Market Report, the collective production rose to 28.648 million bpd in April. The oil products have been fluctuating in a tight range similar to their former weeks. The demand has not changed much for petroleum products and traders are still making deals with the cheapest rates that they can find to have their projects on time. Although India increased the bitumen price by $ 3 today, there is confusion among market participants and difficulty in making decisions.