Oil prices surged 6.7 percent this week, supported by a cold snap and limited OPEC capacity

On Saturday (January 15), U.
S.
oil prices maintained a volatile climbing trend
this week.
Among them, the price of U.
S.
crude oil rose by $5.
3, or 6.
7%, and the price of Brent crude oil rose by $4.
5, or 5.
5%.

Oil prices rose this week, mainly as OPEC executives emphasized capacity constraints and increased demand during the cold snap
.
However, the magnitude of the oil price increase may be limited, with the impact of the variant virus, downward revisions to global economic growth, and signs of a recovery in U.
S.
shale oil limiting the rally
.
Many analysts are still optimistic about the future prospects of crude oil, and JPMorgan Chase believes that U.
S.
oil is expected to rise to $
125 this year.

OPEC senior officials stressed that production capacity is limited, supporting higher oil prices

OPEC+'s oil production capacity has been limited due to reduced investment spending, but the group has worked to increase supply to prevent the market from overheating
.

Recently, global oil prices have soared
.
Oman's oil minister said OPEC+ does not want crude prices to climb to $100 a barrel and is quickly resuming production to prevent global markets from "overheating"
.

For now, OPEC+ continues to gradually resume oil production that was halted during the pandemic at a rate of 400,000 barrels per day, although the growth of oil production has been limited
by internal unrest and budget reductions.

Oman's Minister of Oil, Mohammed Al Rumhi, said: "We are very cautious at OPEC+ and we keep an eye on oil
every month.
But so far, I think it's good to increase production by 400,000 barrels because demand is increasing and we want to make sure the market doesn't overheat
.
We don't want to see $100 a barrel, and the world isn't ready
for that.

Crude oil prices have been rising this year, and the price of crude oil in London has exceeded $
80 per barrel.
Higher oil prices are worrying many consumer countries as they exacerbate inflationary pressures and threaten the global economy's recovery
from the pandemic.

Al Rumhi said this was partly due to a tightening
of global capacity as spending dwindled.
Investment in the industry has been limited for the past five years, and we are now paying the price
.

This is also a problem
that plagues OPEC+ itself.
With Nigeria and Libya plagued by oil supply disruptions, OPEC achieved only partially planned production
increases last month.

Many member countries, such as Angola and Malaysia, have also seen a decline
in oil production due to reduced investment spending.

Even Russia is making related efforts
.
Russia's major producers have said they have been ramping up output as OPEC+ gradually eases production restrictions, and production is now near full capacity
.

Separately, Oman is planning its first-ever international mineral tender, and companies from Japan and the United Kingdom have expressed interest in investing in silicone mining
.

The cold snap hit, and the surge in natural gas prices in the United States drove oil prices

U.
S.
natural gas futures rose
sharply for two consecutive days.
Higher natural gas prices also drove oil prices
.

One of the important factors affecting natural gas prices is the market's forecast of winter temperatures
.
The U.
S.
weather forecast shows a significant cooling
in the main population centers on the east coast on Friday.

In addition, a cold wave is expected to hit the southern region this weekend, so gas demand in the coming days is likely to be at a record
high.

On Wednesday (Jan.
12), CNBC quoted Again Capital analyst John Kilduff as saying that natural gas demand could set a record due to the imminent cold snap, and heating demand in the eastern third of the United States is expected to increase
significantly.

Analysts said the La Niña phenomenon has led to stronger expectations for a cold winter in the United States this year, which will stimulate heating demand
.

Recently, the futures prices of fossil energy such as natural gas, thermal coal and oil have fluctuated
sharply.
From 2021, U.
S.
natural gas prices have soared overall, rising 47%
throughout the year.
It is worth mentioning that in less than two weeks in early 2022, the price of natural gas in the United States has soared by nearly 30%.

Campbell Faulkner, senior vice president and chief data analyst at OTC Global Holdings, said natural gas prices are higher across North America due to cold weather and concerns about tighter supply
.

Jeff Kilburg, chief investment officer at Sanctuary Wealth, believes that the surge in U.
S.
natural gas prices is also partly due to short covering
.

Winter storms are hitting the natural gas market
.
With supply shortages still in place and the effects of the cold snap, all this was amplified, and many short speculators were forced to cover their positions, extending this wave of natural gas gains
.

The EIA report said small producers will lead the shale oil recovery, which is not good for oil prices

The U.
S
.
Energy Information Administration (EIA) predicts that U.
S.
oil production will hit a record high next year as shale producers continue to ramp up production.

Small producers will not be pressured by shareholders, and they may lead
the next wave of production increases.
The U.
S.
Energy Information Administration (EIA) predicts that U.
S
.
oil production is on track to break pre-pandemic records in 2023.

Big shale companies' plans to increase production have also been hampered by Wall Street
.
Investors and banks are pressuring oil companies to live within their means, to pay down debts they owed during the shale gas boom and to pay dividends in return to shareholders
.

Therefore, unlike previous periods of high oil prices, there has been no significant increase in production by large U.
S.
shale oil producers
.
For example, instead of significantly increasing the number of new wells, many of the top U.
S.
producers, such as ConocoPhillips, EOG Resources, and Pioneer Natural Resources, have created new dividend plans and used profits to buy back shares to boost EPS to reward shareholders
.

Against this backdrop, the US is widely expected to struggle to reproduce its 12.
3 million b/d production capacity
.
However, EIA's forecast has fundamentally reversed
this trend.
The reason is that some analysts in the market pointed out that the next wave of production increase will be led
by small producers.
Unlike large producers, small producers in the United States are not pressured by shareholders, who do not force them to "walk on thin ice" with their plans to increase production, so they are willing to increase production
.

The EIA said Tuesday in its monthly short-term energy outlook report that it expects U.
S.
crude oil production to increase by 610,000 b/d in 2023 to 12.
41 million b/d, which would surpass the record
of 12.
3 million b/d set in 2019.
U.
S.
oil production is expected to grow
for nine consecutive quarters starting in the last three months of 2021, the agency said.

U.
S.
crude oil production reached a monthly peak at the end of 2019, but months later, the coronavirus pandemic shook global markets and forced crude producers to cut production
.
Oil prices have recovered more than 50% since then, but major oil producers have been reluctant to restore supply too quickly, leaving the current monthly figure still below pre-pandemic highs
.

The EIA said in its monthly report that relatively high crude oil prices should bring ample funds
for increased production.
The agency expects U.
S.
crude oil production to exceed 12 million barrels
per day starting in the fourth quarter of this year.

On the demand side, EIA forecasts that U.
S.
oil demand is expected to increase by 330,000 b/d to 20.
92 million b/d in 2023; U.
S.
gasoline demand is expected to increase by 90,000 barrels per day to 9.
15 million barrels
per day.

The EIA expects global oil supply to rise to a record 101.
05 million barrels per day this year, up from 100.
93 million barrels per day forecast last month, and global oil production to rise further to 102.
8 million barrels
per day by 2023.

The agency also expects global oil consumption to reach 100.
52 million barrels per day this year, up from a previous estimate of 100.
46 million barrels per day, and jump to 102.
3 million barrels
per day by 2023.

Steve Nalley, acting administrator of the EIA, said in a statement: "We expect global demand for petroleum products to recover and exceed pre-pandemic levels this year, but crude oil production will grow
at a faster pace.
We expect inventories to begin to replenish as crude oil production increases, pushing down the price of
gasoline, jet fuel and other petroleum products in the near term.

The EIA raised its 2022 price forecast for West Texas Intermediate (WTI) crude to $71.
32 per barrel, 7.
4% higher than its December forecast but still significantly below the current level of $81
.
WTI crude futures have had a strong start to the year, having risen more than $5 per barrel
since the end of 2021.

The severe coronavirus situation weighed on the outlook for crude oil demand, which was not conducive to oil prices

The number of hospitalizations for coronavirus infection in the United States is at an all-time high
.
According to US media reports, according to data released by the US Department of Health and Human Services (HHS) on January 11, local time, 145982 people in the United States are currently hospitalized for infection with the new crown virus, and the number of people has exceeded the peak of about 142,000 hospitalizations on January 14, 2021, reaching a record high
.

On January 11, local time, Fauci, the chief infectious disease expert of the White House, warned that as the Omicron variant "spreads like wildfire" across the United States, almost everyone may be exposed (under the epidemic).

Fauci said: Omicron is spreading at an unprecedented rate and will eventually find almost everyone
.
Those who have been vaccinated may also be infected, but with some exceptions, they will most likely not be hospitalized or even die
.
, those who are not vaccinated will suffer
.

The data shows that the number of new crown hospitalizations in the United States has increased rapidly recently, about twice as much as two weeks ago, and nearly 24,000 intensive care beds are being used to admit new crown pneumonia patients
.
In addition, the number of child hospitalizations has far exceeded previous peaks, with nearly 5,000 children now hospitalized with confirmed or suspected COVID, almost double the peak in September last year when the number of child hospitalizations surged due to the Delta strain
.

According to the U.
S
.
Department of Health Services, the total number of people hospitalized for coronavirus infection since August 2020 is about 3.
9 million.
In the first week of January 2022, about 18,600 people were hospitalized every day in the United States for coronavirus infection
.

With the rapid spread of Omicron causing a surge in confirmed cases and hospitalizations, a large number of medical staff have been infected and isolated, and there is a general shortage of manpower, and many hospitals have been overwhelmed
.

The U.
S.
Department of Public Health had to announce new regulations on the 9th, allowing medical workers who are "infected with the new crown but asymptomatic" to "bring illness to work"
.
But the move sparked dissatisfaction
in the U.
S.
medical community.

According to John? According to data released by Hopkins University, the United States has averaged more than 754,000 new coronavirus cases per day in the past week, about three times the average peak last winter and 4.
5 times
the peak when the Delta virus was raging.

The European side is also not optimistic
.
Kluge, director of the World Health Organization's Regional Office for Europe, said in Copenhagen, the capital of Denmark, on the 11th that the mutated new coronavirus Omicron strain is sweeping the European region from west to east, and the medical and health systems of many countries in the region are facing challenges
.

Of the 53 countries in the WHO European Region, 50 have now reported cases of infection with the Omicron strain, and 26 countries have confirmed more than 1%
of their population every week.
Due to the unprecedented speed and scale of transmission, the number of hospitalizations is increasing, and health systems and services in many countries are under great pressure
.

Studies predict that more than 50% of the population in the European Region will be infected with the Omicron strain
in the next 6 to 8 weeks.
Klug warned that the Omicron strain would pose a more serious threat to countries with lower vaccination levels, and he called on countries to take concrete action
on a case-by-case basis.
In countries that have not yet been hit by the Omicron strain, immediate and emergency measures should be taken, including wearing masks, strengthening testing, isolating people with symptoms, and booster
vaccinations.

In countries already affected by the Omicron strain, it is imperative to protect vulnerable and vulnerable populations and minimize disruption
to health systems and essential health services.

Klug said that whether against the Delta or Omicron strains, strengthening coronavirus vaccination, expanding the use of masks, maintaining ventilation in crowded or closed places, and using new diagnostic and therapeutic methods are all effective
.
The overarching goal now is to achieve "vaccine sharing and solidarity"
across age, sector, borders and political boundaries.

Global economic growth forecasts for 2022 have been revised downward, which is not conducive to oil prices

The World Bank released the latest "Global Economic Prospects" report on the 11th, predicting that the global economy will grow by 5.
5% in 2021 and 4.
1% in 2022, both of which are 0.
2 percentage points
lower than the previous forecast.

The global economic recovery will slow significantly due to the spread of the pandemic, reduced policy support in economies and persistent supply chain bottlenecks, with output in emerging market and developing economies expected to remain significantly below pre-pandemic levels
, the report said.

The report forecasts growth of 5% in advanced economies in 2021 and 3.
8% in 2022, downgraded by 0.
4 and 0.
2 percentage points, respectively, while emerging market and developing economies will grow by 6.
3% in 2021 and 4.
6%
in 2022.

The World Bank expects the U.
S.
economy to grow by 5.
6 percent in 2021, down 1.
2 percentage points from its previous forecast, and 3.
7 percent in 2022, down 0.
5 percentage points
.
The eurozone economy grew by 5.
2% in 2021 and will grow by 4.
2%
in 2022.
At the same time, the Bank expects China's economy to grow by 8 percent in 2021 and 5.
1 percent
in 2022.

The report points out that the global economy faces a number of downside risks, including the rapid spread of the Omicron variant of the new coronavirus leading to another resurgence of the epidemic, soaring inflation expectations, and financial stress from record high debt levels
.

At the same time, climate change is likely to exacerbate commodity price volatility and pose challenges
to emerging market and developing economies.
Given the limited policy space in emerging market and developing economies, these downside risks will "increase the likelihood of a hard landing.
"

The Bank calls on economies around the world to work together to accelerate equitable vaccine distribution, take proactive steps to improve debt sustainability in the poorest economies, address climate change and inequality within economies, and put in pro-growth policies to promote green, resilient, and inclusive development
.

World Bank President Malpass said that global macroeconomic imbalances have reached unprecedented levels, income inequality between and within economies is widening, and the global economy is facing unprecedented uncertainty
.
He called for greater coordinated action and country-level policy responses by the international community to achieve healthy growth
for economies around the world.