U.S. crude oil recovered its intraday decline, and industry institutions and Wall Street opened a long-short dispute

There is a growing
divergence between financial institutions and industry groups and institutions' forecasts for the oil market.
The Organization of the Petroleum Exporting Countries (OPEC), the International Energy Agency (IEA) and the U.
S.
Energy Information Administration (EIA) have all recently released new forecasts indicating that the oil market will shift from undersupply to oversupply, a much
faster shift than previously forecast.
This may help drive down prices
.
Wall Street investment banks, on the other hand, continue to stick to their predictions that oil prices will rise further, in some cases in the triple digits
.
Below we take a closer look at the factors underpinning these forecasts and what investors should be aware of in the short term
.

OPEC: The global oil market is expected to experience an oversupply as early as December

OPEC's latest monthly oil market report cut its global oil demand forecast by 160,000 b/d, only forecasting a total average demand of 96.
4 million b/d
in 2021.
The organization also delayed its forecast for a return to pre-pandemic consumption levels until later
in 2022.

OPEC Secretary-General Mohammed Barkindo gave a more pessimistic forecast at a panel at ADIPEC in Abu Dhabi, telling participants that OPEC believes the supply and demand situation will change faster than previously forecast
.
He said the global oil market is expected to experience an oversupply as early as December
.

Some of the reasons for this shift include: there is evidence that oil inventories have been increasing over the past 6 weeks, whereas the organization previously believed that oil inventories would not begin to grow until the beginning of 2022; There is also evidence that high energy prices are holding back demand, especially in India and China
.

IEA: Oil supply will increase by 1.
5 million b/d

Earlier this week, the International Energy Agency (IEA) released a new monthly market report, expecting tight supply and demand conditions to ease
.
The IEA expects oil supply to increase by 1.
5 million b/d
between now and the end of 2021.
The agency believes that the 750,000 b/d increase will come from producers
in Saudi Arabia, Russia and the United States.

At the same time, the IEA predicts that a new wave of the pandemic in Europe, corresponding government restrictions, and weakening industrial activity due to higher energy prices will dampen the oil market
more severely than previously expected.

EIA: Brent crude will stabilize at around $82 a barrel

In its latest short-term energy outlook, the U.
S
.
Energy Information Administration (EIA) predicts that the pace of global oil consumption will slow, with supply growth outpacing demand by OPEC+, U.
S.
shale oil and other non-OPEC producers in early 2022.
On the oil price front, EIA expects Brent to stabilize at around $82 a barrel and remain at that level
for the rest of the fourth quarter.

Investment bank view: The oil market will continue to be tight in the short term

Goldman Sachs recently said it would stick to its "optimistic view.
"
According to its analysts, the global oil market will continue to be undersupplied, and the current strong oil demand will continue to push oil prices
higher.
Goldman Sachs raised its oil price forecast to $90 from $80 a barrel
.

UBS released a similar report saying it expects oil prices to remain "well supported" through 2022, with Brent crude prices expected to hit $90 a barrel in December before flattening at $
85 a barrel in 2022.

Earlier this week, an analyst at Commerzbank downplayed the new OPEC and IEA forecasts in a statement, expecting "the oil market to remain tight in the near term, which will provide support
for oil prices.
" ”

Bank of America has taken a more hawkish stance on rising oil prices, expecting Brent crude to reach $
120 a barrel in June 2022.

The release of reserves by countries has put short-term pressure on oil prices, and how to understand the forecast factors in the future market is the key

On Thursday (November 18), U.
S.
crude oil futures extended the previous session's decline slightly to the downside, recovering slightly after hitting a nearly six-week low of $76.
44 per barrel
.
It was previously reported that the United States is asking major oil consumers such as India and Japan to consider a coordinated release of oil reserves to lower oil prices
.
But U.
S.
crude inventories remain declining, with oil inventories in developed countries at six-year lows, and global oil demand strengthening as more countries reopen their borders and international travel increases
.
These factors have supported oil prices
.

While industry bodies and investment banks have very different views, for investors, the factors that make these predictions are key to
understanding market dynamics.
For example, OPEC is more sensitive to the growth or decline of global oil inventories than other institutions, while also being more sensitive
to slowdowns in global industry and transportation.
Therefore, these factors may have a higher
weight in its forecast.

The U.
S.
Energy Information Administration believes that the U.
S.
shale gas industry is growing faster
than other agencies.
The U.
S.
Energy Information Administration likely overestimated the expected growth of the U.
S.
shale gas industry because it has been overestimating production growth
for much of 2021.

From an investment banking perspective, especially those with financial ties to companies that produce oil in the United States, may be underestimating the potential for
U.
S.
oil production growth.
Based on this relationship, they may see information that the EIA does not take into account, and as interim shareholders, they may urge the invested companies not to increase production
.
However, there are also new oil companies that are not saddled with debt and receive money from private equity that will drive some production growth
in the short term.