Oil price enterprises in the past three years of high Point When will the energy market be "changed"?

Crude oil prices turned positive, driven by supply constraints and a weaker dollar, which could post its biggest weekly decline in more than a year. International oil prices rose more than 1.3 percent in the European market on Friday (January 14), further approaching a more than three-year high set at the end of October 2021. It is expected to rise for the fourth consecutive week.

Analysts are optimistic about 2022 oil prices, but the headwinds are still difficult to avoid

In the face of strong oil prices, several banks are optimistically predicting that oil prices will reach $100 per barrel in 2022, and demand is expected to exceed supply, especially in OPEC+ countries. PVM analyst Stephen Brennock said: "When you consider that OPEC+ is still far from reaching its total quota, this reduction buffer could be the most bullish factor for oil prices in the coming months. ”

However, risks to the oil market remain strong. In November 2021, President Biden pushed countries including britain and Japan to try to release oil from national strategic reserves. OPEC+ then agreed to gradually increase supply. In addition, the impact of the Opichron variant on economic recovery is unclear, which has exacerbated uncertainty about oil prices. In the long run, how the world transitions from oil, coal and natural gas to cleaner energy sources such as solar and wind is a major question.

J.P. Morgan Asset Management (J.P. David Lebovitz, global market strategist at Morgan Asset Management, noted that large integrated oil and gas producers are working to develop renewable energy technologies to maintain their impact. And the funds that invest in the energy sector are often dominated by these global companies.

Michael Jin, a senior equity research analyst at Epoch Investment Partners, a New York subsidiary of Toronto-Dominion Bank, said U.S. utilities are beginning to adopt solar and wind turbines. "We're a little bit cautious about investing in renewable energy through the utilities sector," he said. It's a great way to get exposure because these companies are more like toll roads. They are still able to generate cash flow and pay dividends. ”

When will crude oil demand peak?

For energy investors, the size of oil demand in the coming decades remains a key question. A recent report by Morningstar predicts that global oil demand will peak around 2030 and then gradually decline. The report estimates that by mid-century, the global economy will consume 11 percent less oil than it did in 2019, based in large part on a prediction that more than half of the world's roads will be electric.

Dave Meats, head of energy and utilities research at Morningstar, said: "We are bullish on the popularity of electric vehicles. This is partly because countries have been subsidizing the development of electric vehicle technology, hoping to dominate this global market in the future. ”

But he predicts that global shipping and aviation will continue to need oil until 2050. The weight of the batteries needed for long-distance travel can be too great to make the boat float or the plane fly in the air. He added that aviation biofuel obtained from sources such as corn or used cooking oil could be more expensive than conventional fuels.

This article originated from Huitong Network