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.
Image source: Getty Images
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.
