ASX 200 shares in the oil and gas industry topped the leaderboards in September thanks largely to a jump in oil prices.
Brent crude oil briefly rallied above US$80 a barrel for the first time in three years amid expectations that oil demand will return to pre-pandemic levels in 2022.
Analysts at Goldman Sachs were quick to raise their forecast for oil by US$10 to US$90 a barrel.
Oil has enjoyed favourable supply side-dynamics, notably Hurricane Ida that impacted the US state of Louisana in August and took a major toll on global output.
From a demand perspective, OPEC's monthly oil report said:
… 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.
A bumper month for ASX 200 oil and gas players
Beach Energy Ltd (ASX: BPT) was the best performing ASX 200 energy share, rallying 42.38% last month to a 5-month high.
The largest ASX-listed oil and gas player, Woodside Petroleum Limited (ASX: WPL) was also ripe for a rebound, surging 22.52% in September to a 3-month high.
Santos Ltd (ASX: STO) shares added 18.7% last month to a 2-month high.
Oil Search Ltd (ASX: OSH) lagged behind slightly, rallying 17.3% to a 7-month high.
What's next for oil?
Analysts expect a tight oil market to remain in place for the remainder of the year.
According to S&P Global, the Joint Technical Committee of OPEC+ report flags that the market will be undersupplied by 1.2 million barrels a day in October and 900,000 barrels a day in November.
Supply constraints against the backdrop of growing demand may continue to pave tailwinds for ASX 200 oil and gas players.
OPEC+ will hold another meeting on Monday, 4 October which may serve as a major catalyst for oil prices.
In response to the tight oil market, it's possible that OPEC will opt to raise quotas and drive additional supply into the market.
