ASX 200 energy shares are a standout performer on Tuesday despite the S&P/ASX 200 Index (ASX: XJO) trading 0.09% lower at 7,418.50.
This comes after OPEC's closely watched oil market forecast was released on Monday, where it raised its 2022 forecasts.
ASX 200 energy shares surge on bullish OPEC outlook
ASX 200 Oil producers are experiencing broad-based buying on Tuesday after OPEC said it expects oil demand to exceed pre-pandemic levels in 2022.
OPEC hiked its oil forecasts to 4.15 million barrels a day (b/d) from 3.28 million (b/d) a month ago. The report expects oil demand to "robustly grow", saying:
Revisions were driven by both the OECD and non-OECD, as the recovery in various fuels is expected to be stronger than anticipated and further supported by a steady economic outlook in all regions. Oil demand in 2022 is now projected to reach 100.8 mb/d, exceeding prepandemic levels.
OPEC called for its participating allies to step up production in response to the improving landscape.
OPEC and non-OPEC participating countries in the Declaration of Cooperation (DoC) have agreed to adjust upward their overall production by 0.4 mb/d on a monthly basis starting August 2021. Several other non-OPEC producers also raised their production in July.
However, there might be some short-term pain for oil markets following the uncertainties caused by the delta variant.
… the increased risk of COVID-19 cases primarily fuelled by the Delta variant is clouding oil demand prospects going into the final quarter of the year, resulting in downward adjustments to 4Q21 estimates. As a result, 2H21 oil demand has been adjusted slightly lower, partially delaying the oil demand recovery into 1H22. Global oil demand in 2021 is now estimated to average 96.7 mb/d.
Major ASX 200 oil shares including Woodside Petroleum Limited (ASX: WPL), Oil Search Ltd (ASX: OSH) and Santos Ltd (ASX: STO) are rallying strongly, up 6.28%, 4.28% and 4.5% respectively.
