EIA crude oil inventories and refined oil inventories both fell sharply, and U.S. oil rose slightly by $0.3 in the short term

On Wednesday (December 15) during the New York session, at 23:30 Beijing time, data released by the U.
S.
EIA showed that commercial crude oil inventories in the United States, excluding strategic reserves, fell more than expected in the week ended December 10, and refined oil inventories and gasoline inventories fell sharply more than expected
.
U.
S
.
crude oil prices edged up $0.
3 in the short term after EIA data.

EIA crude oil inventories fell more than expected

Specific data showed that the EIA crude oil inventory changes in the United States for the week ended December 10 actually decreased by 4.
584 million barrels, compared with an expected decrease of 1.
7 million barrels and a decrease of 241,000 barrels
in the previous month.

In addition, EIA gasoline inventories in the United States for the week ended December 10 actually decreased by 719,000 barrels, compared with an expected increase of 2.
05 million barrels and an increase of 3.
882 million barrels in the previous month; EIA refined oil inventories in the United States actually decreased by 2.
852 million barrels in the week ended December 10, an expected increase of 1 million barrels and an increase of 2.
733 million barrels
in the previous month.

U.
S.
crude exports rose 1.
375 million b/d to 3.
645 million b/d
last week, according to the EIA report.
U.
S.
domestic crude production was flat last week at 11.
7 million b/d
.
The four-week average supply of U.
S.
crude products was 21.
25 million b/d, up 12.
6%
from a year earlier.

Commercial crude oil, excluding strategic reserves, imported 6.
471 million b/d last week, down 28,000 b/d
from the previous week, the EIA report showed.
Commercial crude inventories, excluding strategic reserves, fell by 4.
584 million barrels to 428.
3 million barrels, down 1.
1%.

The EIA report showed that demand for gasoline products in the United States reached a record 23.
2 million b/d
.
U.
S.
Strategic Petroleum Reserve (SPR) crude inventories fell in the latest week to their lowest level
since December 2002.
U.
S.
Gulf Coast distillate stocks fell to their lowest level
since December 2019 in the most recent week.
U.
S
.
crude exports jumped 61 percent from last week to their highest level since July.

OPEC raised its global oil demand forecast for the first quarter of next year, saying that the impact of the Omicron variant was mild and short-lived

On Monday, the Organization of the Petroleum Exporting Countries (OPEC) raised its global oil demand forecast for the first quarter of 2022 and stuck to a timeline for oil demand to return to pre-pandemic levels, saying the Omicron variant would have only a mild and short-lived impact
.

OPEC said in its monthly report that it expects global oil demand to average 99.
13 million barrels per day in the first quarter of 2022, up 1.
11 million barrels
from last month's forecast.

"Some of the demand rebound previously expected in the fourth quarter of 2021 has been delayed to the first quarter of 2022, and demand will rebound
more steadily in the second half of 2022," OPEC said in the report.
In addition, as the world becomes better prepared to respond to the pandemic and its associated challenges, the impact of the new Omicron variant is expected to be mild and short-lived
.
”

In its monthly report, OPEC kept its demand growth forecast unchanged for this year and next, saying that global oil demand will increase by 4.
15 million b/d
in 2022.
Global oil demand is expected to exceed 100 million b/d by the third quarter of 2022, in line with
last month's forecast.
According to OPEC data, the last time global oil demand exceeded 100 million b/d was in 2019
.

OPEC supply increased, but OPEC maintained its forecast for U.
S.
shale oil production unchanged
.
The report also showed that OPEC+ production increased
as it phased out last year's record production cuts.
At its Dec.
2 meeting, OPEC+ agreed to raise monthly output by 400,000 b/d
in January.

OPEC output rose by 290,000 b/d to 27.
72 million b/d in November, mainly driven by production increases
from Saudi Arabia and Iraq, the two largest producers, the report showed.
Meanwhile, Nigeria averaged 1.
27 million b/d of crude oil production in November, regaining the top spot
among African crude producers, according to OPEC's latest monthly report.

Investors are also focused on signs of a sharp rebound in U.
S.
shale oil supply, as higher oil prices spur more investment, which could adversely
affect OPEC+'s efforts to support the market.
But this month, OPEC's forecast for U.
S.
shale production growth in 2022 was largely stable at 600,000 b/d
.
The growth forecast for total supply from non-OPEC countries in 2022 remains unchanged
.

The report shows that OPEC now has room to increase production
further from November.
OPEC said it expects demand for OPEC crude to reach 28.
8 million b/d by 2022, up 200,000 b/d
from last month's forecast.

The IEA says oil supply is about to outstrip demand and continue to surge in 2022

On Tuesday, the International Energy Agency (IEA) said that a surge in coronavirus infections and the emergence of the Omicron variant would dampen global oil demand, but the overall picture is that oil production will exceed demand this month and soar
next year.

In its monthly oil report, the IEA said: "The surge in Covid cases is expected to only temporarily slow rather than stifle the current recovery
in oil demand.
" The impact on the economy of new containment measures to stop the spread of the virus is likely to be more modest
than previous waves of the pandemic.
”

The U.
S.
will be the country with the largest increase in production for the second month in a row, according to the IEA, as drilling activity there is on the rise
.
Next year, Saudi Arabia and Russia could also see record annual production if OPEC+ completely lifts its agreed production restrictions
.
This could result in an average oversupply of 1.
7 million barrels per day in Q1 and Q2 2022, respectively
.
Global oil supply is likely to increase by 6.
4 million b/d next year and 1.
5 million b/d
in 2021.

The IEA cut its oil demand forecast by 100,000 b/d each for this year and next, mainly due to new travel restrictions expected to hit jet fuel use
.
Global oil demand is now expected to increase by 5.
4 million b/d in 2021 and 3.
3 million b/d in 2022, when it will return to pre-pandemic levels of 99.
5 million b/d
, the agency said.

The surge in European gas prices supported oil prices, and German foreign ministers restricted Nord Stream 2 after Merkel left office

Lukashenko wants to sacrifice "gas weapons" to prompt the European side to "calmly" think about the future of
bilateral relations as Europe enters a cold winter.

In the face of the threat of further sanctions from Europe, Belarus is ready to sacrifice "gas weapons"
.
In addition, the Nord Stream 2, which was originally planned to be vented by the end of the year, was stuck in the review process of German regulators at the last minute, and European natural gas prices jumped
.

On December 14, Belarusian President Alexander Lukashenko again warned Europe that Minsk could suspend gas transmissions to Europe through its territory in response to new Western sanctions
.
Lukashenko threatened last month with retaliation for all new EU sanctions, including the closure of Russian gas and cargo pipelines
through Belarus.

Belarus has a long history of contradictions with Europe
.
The "forced landing" of an Irish flight by Belarus in May this year directly led to the escalation
of contradictions between the two sides.
Since then, for most of the year, the EU's sanctions against Belarus have continued to increase, causing relations between the EU and Belarus to fall into a trough
.

This time, Lukashenko wants to sacrifice "natural gas weapons" to prompt Europe to "calmly" think about the future of
bilateral relations as Europe enters a cold winter.
As the largest supplier of natural gas to Europe, there are several gas pipelines
to Europe in Russia.
Previously, the much-watched Russian-German gas pipeline "Nord Stream 2" was one of
them.
This time, Belarus threatened to shut down a gas pipeline
from Russia's Yamal region to Europe.

Although Russia has several gas pipelines to Europe, there are variables at present
.
For example, Nord Stream 2, which was originally planned to be ventilated before the end of the year, was stuck at the last minute in the review process of German regulators, so that the future of whether the pipeline can be put into operation on schedule is still uncertain
.
The gas pipeline through Ukraine to Europe has fallen into disrepair, and Ukraine has previously been found to have "intercepted" transit natural gas, so the gas pipeline through Ukraine to Europe is no longer the first choice
for Russia.

As an alternative route to ensure Europe's natural gas supply, the stability of this gas pipeline from the Yamal region to Europe is crucial
to Europe's survival through the winter.

Europe, which has been trapped by a shortage of natural gas stocks and soaring electricity prices this year, obviously cannot afford to toss
more.
According to the total European gas inventory (AGSI+) data, the current European gas inventory is only 62%.

The agency's forecasts show that if this winter is as cold as usual and the gas supply gap cannot be filled in time, the current inventory will only be enough to last until February
next year.

Once Belarus decides to shut down the gas pipeline to Europe, what will Europe, which is already entering winter, respond? Russian media believe that in order to avoid the embarrassment that Europe will not have gas available this winter, the priority is to release "Nord Stream 2"
as soon as possible.

Unlike Russia's gas pipeline to Europe, Nord Stream 2 has the advantage of bypassing Eastern Europe and delivering gas
directly to Germany through the Baltic Sea.
In terms of mileage alone, this route can save nearly 2,000 kilometers
compared to the gas pipeline through Ukraine.
Once fully ventilated, Russia could supply an additional 55 billion cubic meters of gas
to the EU each year.
This is undoubtedly a big plus
for Europe, where natural gas supplies are currently tight.

However, in view of the current confrontation between Russia and Ukraine, the new German foreign minister Annalena Baerbock (Annalena Baerbock) from the Green Party pointed the spearhead at "Nord Stream 2" on the 12th, saying that the pipeline did not comply with EU energy regulations and clearly gave a statement
that "it cannot be approved".
In addition, the United States, Britain, France, Italy, Japan and Canada, which also belong to the Group of Seven (G7), also warned Russia after the meeting, saying that Russia must exercise restraint in the confrontation situation, otherwise the West will make Russia more than worth the loss
.

Tom Mazek-Manser, head of natural gas analysis at market information service ICIS, believes that some European energy traders had thought that Nord Stream 2 was expected to deliver some gas to Europe this winter, but Baerbock's comments hinted that the gas pipeline may continue to be delayed, causing the market to react and push prices back to high levels
.

For Germany, which is already starved of energy, the rise in natural gas prices is teasing to make things worse
.
According to German media reports, many German people denounced Baerbock, saying that the German foreign minister should defend Germany's interests
.
Many Germans believe that stopping the "Nord Stream 2" will indeed cost Russia a heavy price, but the EU is also no better, and if it is not careful, the EU will face an energy crisis
.

Soaring U.
S.
inflation weighs on the dollar while supporting oil prices

Inflation continues to spiral out of control! U.
S.
consumers expect prices to rise 10 percent
in key staples.
U.
S.
inflation has soared in recent months, which has supported commodity prices, led by oil prices
.

The latest consumer survey by the Federal Reserve Bank of New York showed that U.
S.
consumers' inflation expectations for the coming year rose to a new high of 6 percent, the 13th straight month of rise and the highest since
the survey began in 2013.

Consumer expectations for personal income growth in the coming year fell to 2.
8 percent from 3.
0 percent in the previous month, the survey showed, suggesting that U.
S
.
consumers estimate inflation to rise twice as much as wages in the short term.

While the median expected 1-year inflation rate is 6.
0%, the upper limit of the 75% quartile reaches 9.
7%, implying that at least 25% of respondents believe inflation will soar to near double digits
.
At the same time, 25% of respondents expect inflation to be at or below the "very low" level
of 3.
0%.

Uncertainty about the expression of future inflation outcomes has increased in both the short and medium term, with both reaching new series highs
.
Other data from the survey also suggests that consumers now expect prices for most key necessities to rise by 10 percent
in the coming year.

Among them, gasoline prices will rise by 9.
15%, food prices will rise by 9.
24%, medical expenses will rise by 9.
6%, and rents will increase by 10.
03%.

The median change in the expected cost of college education in the coming year increased by 1.
6 percentage points to 9.
1 percent, the highest level
since March 2015.

Having apparently lost all control over the one-year forward inflation data, the Fed instead focused its remaining persuasion on long-term inflation expectations, noting that "the median three-year forward inflation expectation fell to 4.
0% from 4.
2% in September and October.
"
This is the first decline in the three-year indicator since June 2021 and the second decline
since October 2020.

Notably, both the Fed's 1-year and 3-year inflation expectations are now much higher than those of the recent University of Michigan Consumer Confidence Survey, where the 1-year inflation forecast is 4.
9%, while the 5-10 year inflation expectation is still around
3.
0%.
Both numbers are expected to continue to rise
in the coming months.

The report also includes information on the labor market and household spending, showing the unease and frustration that prevails throughout the U.
S.
economy
.
The average unemployment rate estimate (the average probability that the unemployment rate will rise in a year's time) rose 0.
6 percentage points to 36.
1 percent
.
The average perceived probability of unemployment in the next 12 months increased from 11.
0% to 13.
0%, and the average probability of voluntary departure in the next 12 months also increased from 20.
0% to 20.
2%.

Saudi Arabia expects a fiscal surplus next year for the first time in nearly a decade due to relatively high oil prices recently

On Sunday, Saudi Arabian Finance Minister Mohammed al-Jadaan said that next year Saudi Arabia's fiscal is expected to achieve its first surplus in nearly a decade, in addition to the government's control of the fiscal expenditure budget, higher oil prices have further increased Saudi fiscal revenue
.

The Saudi government expects a fiscal deficit of 2.
7 percent of GDP this year and a surplus of 90 billion riyals ($23.
99 billion) next year, or 2.
5 percent of GDP, which would be the first since it ran a deficit after the 2014 oil price crash
.

Saudi News Agency SPA quoted Crown Prince Mohammed bin Salman as saying: "The surplus will be used to increase government savings to cope with the needs of the epidemic, and improve the Kingdom's fiscal situation and increase its ability
to respond to global shocks and crises.
"

According to the budget document, Saudi Arabia plans to spend 955 billion riyals next year, a year-on-year cut of nearly 6%.

According to the budget proposal, the Saudi government plans to cut military spending by about 10% from next year's military budget, which also indicates that its military conflict with neighboring Yemen has begun to ease
.

Saudi revenues jumped to 930 billion riyals this year from a previously expected 849 billion riyals, an increase of nearly 10%, due to the improvement of the epidemic, the recovery of global energy demand, the rise in crude oil prices and further increases in production, and Saudi Arabia expects to reach 1.
045 trillion riyals
next year.

According to the budget, Saudi Arabia forecasts GDP growth of 2.
9% this year and 7.
4%
in 2022.
Saudi Arabia did not disclose the price
of oil it assumed when calculating its budget.

Monica Malik, chief economist at Abu Dhabi Commercial Bank, had estimated that Saudi Arabia's budget could be based on oil prices as low as $
50-$55 per barrel, based on previous official revenue projections.

Malik said government revenue increased by 15.
7%
in 2022 compared to the previous budget.
With oil prices rising sharply, Saudi Arabia's budget will have oil prices above $
70 per barrel.

In addition, Mohammed al-Jadaan said in an interview: "Saudi revenue and expenditure have now been completely decoupled, and we are telling the Saudi people, the private sector and the entire economy that you can make plans
predictably.
" Budget caps will remain stable
regardless of changes in oil prices and revenues.

The U.
S.
began releasing oil reserves this week, but other countries did not act in favor of oil prices

Three weeks
have passed since the United States called on the international community to collectively release the country's oil reserves.

On November 23, US President Joe Biden said that the United States will release 50 million barrels of crude oil from its strategic petroleum reserve in the coming months, and that the United Kingdom, Japan and South Korea will also release national strategic crude oil (SPR)
at the same time.

On Friday, the U.
S.
Department of Energy said it would sell 18 million barrels of crude oil directly from the Strategic Petroleum Reserve on December 17 to reduce gasoline prices
.
Another 32 million barrels are short-term swaps that will be released through exchanges in the coming months, with agreements to be returned
between 2022 and 2024 when oil prices stabilize.

But so far, almost no other country has taken any action
.
This has led the market to wonder whether the Biden administration can still carry out the release of SPR, especially after
the Omicron variant caused global crude oil prices to fall.

John Smith, Chief Strategist at JTD Energy Services Pte? John Driscoll said they would not undermine relations with major producers in order to meet the demands of the US president, and that using SPR before the peak of winter demand could cause major problems with disruptions to energy supplies
.

After OPEC+ rejected Biden's call to increase oil supplies, the Biden administration lobbied intensively over several weeks, which partly contributed to the fall
in prices.
On the other hand, many in the market are disappointed
with the amount that countries other than the United States have promised to release.

India is the only Asian country that has made it clear that it will release 5 million barrels of crude oil, but the exact timing of the release is still in question
.
On December 3, the head of India's Strategic Petroleum Reserve Ltd.
said he was awaiting government advice
on how and when to sell SPR.

Japan did not disclose specific production or timing, but last month, the Nikkei newspaper reported that it would release about 4.
2 million barrels of crude oil
.

On November 23, South Korea said it would consult with partner countries before deciding on the exact amount and timing, and said it could release about
3.
5 million barrels.

A UK government spokesman said companies could choose to participate in the joint launch
if they wished.
The spokesman said that if everyone was involved, it would result in the sale of the equivalent of 1.
5 million barrels of oil
.

At a Nov.
29 news conference, White House press secretary Jen Psaki, asked about other countries' release of foreign exchange reserves, said the U.
S.
encourages any country to be as transparent as
possible about any policy.

The advent of Omicron at the end of November led to a sharp drop in crude oil prices, which may have reduced the urgency for countries to act
.
However, there are indications that this new variant may not be as severe
as thought.
Both the Brent and WTI crude futures contracts posted weekly gains of about 8% last week, their first weekly gain in seven weeks and erased more than half of their losses since the outbreak of the Omicron outbreak on Nov.

25.

If crude oil prices continue to rise, it may give non-US countries more reason to release SPR
.
Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd.
, said: "Market sentiment has improved
as the threat of the Omicron variant has receded.
U.
S.
crude could test the recent high of $73.
34 before trying to rise towards $78, the level
before Omicron fears led to a sharp drop at the end of last month.