No Biden Band Aid Would Have Kept Balances Tight
Had it not been for Joe Biden’s Band-Aid of withdrawals from the Strategic Petroleum Reserve (SPR), Russian supply outages and rising demand would have kept balances tight and stocks drawing through the remainder of the year.
That’s according to Bill Farren-Price, the director of Enverus Intelligence Research, who made the comment in a statement sent to Rigzone this week.
“Aside from the oil being released from the Strategic Petroleum Reserve, U.S. oil production growth will help ease tightness, even if delivering that growth is challenged by oil field constraints such as limited rig crews,” Farren-Price added in the statement.
On March 31, a White House fact sheet outlined that Biden would be announcing “the largest release of oil reserves in history”, putting one million additional barrels on the market per day on average, every day, for the next six months.
“The scale of this release is unprecedented,” the fact sheet noted.
Last month, the U.S. Department of Energy revealed that contracts had been awarded for 30 million barrels from the SPR that was noticed for sale on April 1. A total of 16 companies responded to the notice, submitting 126 bids for evaluation, with contracts awarded to 12 companies, the DOE highlighted.
Following the announcement by Biden to release 180 million barrels of oil from the SPR, the American Petroleum Institute (API) highlighted that the act is not a long-term solution.
Brent Still Comfortably Above $100
In its latest statement, Enverus Intelligence Research revealed that it still expects Brent to remain comfortably above $100 per barrel in 2022.
The company highlighted in the statement that it halved its 2022 forecast for oil demand growth to 1.5 million barrels per day last month but added that, given the recovery in U.S. air traffic this year and steady gasoline consumption, it had nudged up its forecast to 1.65 million barrels per day year on year.
Enverus Intelligence Research also outlined in the statement that the timing of peak oil demand is now less clear.
“On the one hand, higher oil prices and security of supply concerns will advance the transition to renewables,” the company noted.
“But policymakers in the near term may also choose to extend the life of coal and other carbon-intensive hydrocarbons as part of a plan to address surging energy prices,” Enverus Intelligence Research added.
At the time of writing, the price of Brent crude oil stood at $109.16 per barrel. The U.S. Energy Information Administration (EIA) recently forecasted that the Brent spot average would come in at $103.35 per barrel this year.
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