EIA crude oil inventories fell more than expected, and U.S. oil jumped $0.4 short-term

On Wednesday (January 12) 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 January 7, but refined oil inventories and gasoline inventories increased more than expected
.
U.
S
.
crude oil prices jumped $0.
4 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 January 7 actually decreased by 4.
553 million barrels, compared with an expected decrease of 1.
85 million barrels and a decrease of 2.
144 million barrels
in the previous month.

In addition, EIA gasoline inventories in the United States actually increased by 7.
961 million barrels in the week ended January 7, compared with an expected increase of 1.
7 million barrels and an increase of 4.
418 million barrels in the previous month; EIA refined oil inventories in the United States actually increased by 2.
537 million barrels in the week ended January 7, an expected increase of 2.
75 million barrels and an increase of 10.
128 million barrels
in the previous month.

U.
S.
crude exports fell by 599,000 b/d to 1.
955 million b/d
last week, according to the EIA report.
U.
S.
domestic crude oil production fell by 100,000 barrels per day to 11.
7 million b/d
last week.
U.
S.
Strategic Petroleum Reserve (SPR) inventories fell by 300,000 barrels, or 0.
05%,
to 593 million barrels last week.
The four-week average supply of U.
S.
crude products was 20.
792 million b/d, up 10.
8%
from a year earlier.

Commercial crude excluding strategic reserves imported 6.
069 million b/d last week, up 185,000 b/d
from the previous week, according to the EIA report.
Commercial crude inventories, excluding strategic reserves, fell by 4.
553 million barrels to 413.
3 million barrels, down 1.
1%.

U.
S.
Gulf Coast crude inventories fell to their lowest level
since January 2020 in the week of January 7, according to the EIA report.
U.
S.
EIA crude inventories fell to their lowest
level since October 2018 in the week of Jan.
7.

EIA expects small producers to lead the recovery in shale oil, and U.
S.
crude oil production will hit a record high in 2023

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 is not conducive to the outlook for crude oil demand

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
.

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
.

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.

The downward revision of global economic growth forecasts for 2022 is negative for 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.