OPEC said Thursday worries about the Omicron variant of the coronavirus are steadily fading while the global economy heats up, supporting mounting oil demand that could soon surpass the cartel’s expectations reported only weeks earlier.

At the same time, needed supply increases are in the works but gathering momentum more slowly than hoped, OPEC said, further explaining the January spike in Brent crude prices. The international benchmark last month climbed about 20% and eclipsed $90/bbl. It has held above that level since early this month and topped $92 in intraday trading Thursday.

OPEC researchers in early January predicted global demand would rise by 4.15 million b/d and that consumption would exceed 100 million b/d in the third quarter, returning demand to pre-pandemic levels. In its latest Monthly Oil Market Report, released Thursday, OPEC stuck with that forecast but said based on current consumption trends, it could soon revise its outlook higher.

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“The main challenges for 2022 remain the containment of the Covid-19 pandemic and any resulting restrictive measures, supply chain disruptions, inflation, and labor shortages that could dampen economic growth,” researchers said. “Nevertheless, upside potential to the forecast prevails, based on an ongoing observed strong economic recovery…Moreover, mobility is expected to gain further momentum, particularly with regard to the travel and tourism sector.” 

The Saudi Arabia-led cartel and a Russia-led group of allies known as OPEC-plus agreed last week to further increase output by 400,000 b/d in March. This would continue a targeted rate of monthly supply increases OPEC-plus began in August to unwind production cuts of nearly 10 million b/d made in April 2020.

However, several member countries have struggled to meet their quotas in recent months – with OPEC-plus falling short by more than 100,000 b/d last month alone. Challenges range from crumbling infrastructure in Nigeria to political strife in Libya.

“Oil consumption is likely to hit 100 million b/d by the summer as pent-up demand for travel is unleashed globally,” Rystad Energy’s Louise Dickson, senior analyst, said Thursday.

“However, the rosy outlook for oil demand is only one factor in the equation pushing oil prices higher,” she added. “Oil supply is tight and spare capacity is sparse, creating a tight market environment with a bullish impact on prices.”

In the United States, demand is mounting. Total petroleum consumption over the last four-week period averaged 21.9 million b/d, up 12% from the same period last year, the Energy Information Administration (EIA) said in its latest Weekly Petroleum Status Report, released Wednesday.

Over the past four weeks, gasoline demand averaged 8.5 million b/d, up by 8% from a year earlier, while distillate fuel consumption, including diesel, averaged 4.6 million b/d, up 10%. Jet fuel demand spiked 30% to 1.4 million b/d, according to EIA.At the same time, the agency said U.S. production is holding relatively flat early in 2022 – around 11.6 million b/d — and more than 1.0 million b/d below pre-pandemic highs.