Multiple factors stir the outlook for the international energy market in 2022

Under the background of limited supply and rising demand, international energy prices fluctuated upward in 2021
.
Prices of crude oil, natural gas, electricity and others hit multi-year highs
.
Looking ahead to 2022, multiple factors will continue to roil global energy markets, and despite bullish sentiment, the outlook for global energy markets remains highly uncertain.

In 2021, as the world economy gradually recovers from the impact of the new crown epidemic, global energy demand has rebounded significantly but supply growth has been limited, so international oil prices have entered an upward channel
.
On December 31, the main contracts for light crude futures on the New York Mercantile Exchange and London Brent crude futures closed at $75.
21 and $77.
78 per barrel, respectively, up about 55% and 50%
from the end of 2020.

International oil prices are still highly sensitive to the epidemic situation, and changes in the epidemic affect demand expectations and cause oil price fluctuations
.
On November 26, 2021, the day the World Health Organization warned the Omicron variant of the new coronavirus, international oil prices fell by more than 10%, and by about 20%
throughout November.
Oil prices recovered somewhat as market concerns eased, but remained significantly below the high of $86 a barrel reached in October
.

In its latest oil market report, the Organization of the Petroleum Exporting Countries (OPEC) maintained its expectation that global oil demand will increase by 4.
2 million barrels per day in 2022, believing that the impact of the Omicron strain will be mild and
short-lived.
OPEC expects global crude oil consumption to average 100.
8 million barrels per day in 2022, roughly the same
as in 2019 before the pandemic.

The International Energy Agency recently released a monthly oil market report saying Saudi and Russian crude oil production could reach record highs if OPEC and non-OPEC producers finally lift production cuts completely
.
Coupled with rising crude oil production in the United States, Canada, Brazil and other countries, the average daily global crude oil supply will increase by 6.
4 million barrels per day in 2022, up from 1.
5 million barrels in 2021
.

ING believes that oil prices have been supported by the cautious production increase policy of oil producers
.
But as supply increases, commodity prices will come under pressure
if the pandemic disrupts the pace of economic recovery.
Commodity prices are expected to fall
in 2022 as supply and demand become more balanced.

Goldman Sachs expects oil demand to continue to rise
in 2022 and 2023 as aviation, transportation and infrastructure demand rises.
Damien Coulvaland, head of energy research at Goldman Sachs, believes that the Omicron strain has limited economic impact, and it is expected that Brent crude oil prices will remain around $85 per barrel in 2022 and 2023, and may even exceed $
100 per barrel.

The U.
S.
Energy Information Administration expects supply growth to outpace global oil consumption growth in 2022, with Brent crude futures averaging around
$70 per barrel for the year.

Zhang Longxing, director of the oil product division of Shanghai Oil and Gas Trading Center, analyzed that driven by the tightening of liquidity in the capital market and the increase in OPEC production, Brent crude oil prices may fall, and it is necessary to pay attention to the prospects for the recovery of Iranian crude oil exports and the growth of US shale oil production in the second half of
the year.
It is expected that the price of Brent crude oil will fluctuate in a large range throughout the year, and the average price in the first half of the year may be higher than that in the second half, and the annual fluctuation range may be 60 to 85 US dollars
per barrel.

At present, the energy crisis in Europe is intensifying, and the mismatch between supply and demand has led to a surge in prices, and the wholesale price of natural gas has risen to five or six times
that of the beginning of 2021.
Europe's high dependence on foreign energy, traditional energy and new energy are facing challenges in iterative succession, which also affects the stability
of European energy supply.

According to the European Gas Infrastructure Association, the current European gas inventory is only 68% of the full load level, well below the 10-year average
.

Alexander Nazarov, an analyst at Russia's Novatek company, said that since entering the winter, European natural gas prices have been rising, which is mainly related
to factors such as the sharp increase in market demand with seasonal changes and the limited supply capacity of European liquefied natural gas itself.

ING expects gas prices in Europe to start to fall after the peak winter demand period, but expects gas prices to remain seasonally high for most of 2022
.

Economists in the IMF's Research Department believe that seasonal pressures will ease after the end of winter and natural gas prices will return to normal in the second quarter, but uncertainty remains high
.

Ivan Timonin, an expert at Moscow-based Vigon Consulting, said that global natural gas market demand will continue to increase in 2022, and natural gas prices will need to wait until the weather warms up, demand slows, the Nord Stream 2 gas pipeline is put into use, and new liquefied natural gas projects in the United States reach full capacity
.