Oil and gas supply will grow faster in 2022 than it did in 2021 to the point of catching up and even surpassing energy demand growth, S&P Global Platts Analytics said on Monday in its newly-released 2022 Energy Outlook.
While rebounding demand for oil and gas was the key theme this year, next year, the key theme in energy markets will be the rebound in supply, S&P Global Platts analysts said.
Thanks to rising exports of liquefied natural gas (LNG), higher oil and gas production from the U.S. shale patch, and the return of investment in supply from non-OPEC members, supply will not only meet demand next year, but it will also exceed demand and help increase the currently depleted inventory of energy commodities globally, S&P Global Platts Analytics says.
According to the analysts, the recently resurfaced fears of new COVID variants, such as Omicron, significantly impacting oil demand are “likely overblown.” Still, those fears will raise the already elevated volatility on the global energy markets, S&P Global Platts Analytics reckons.
Much of the outlook of 2022 will depend on how the first quarter of the year unfolds and on weather conditions during the winter in the northern hemisphere, the analysts noted.
In oil and gas, the world faces two key geopolitical signposts in Q1 2022 – the so-called Iran nuclear deal and the controversial Russia-led gas pipeline Nord Stream 2, S&P Global Platts Analytics said. If those two issues are not resolved early next year, they will continue to have a large influence on oil and gas prices for the rest of 2022, too, according to S&P Global Platts.
Gas markets and gas prices early next year will be determined by two major factors—the winter weather and Russian pipeline gas supply to Europe. In oil, all analysts and even OPEC+ expect a surplus to start building as early as the first quarter of 2022.