Uncertain Market Conditions, Indonesian Crude Oil Prices Slip

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Jakarta, ONENEWS.MY.ID – The average Indonesian Crude Price (ICP) or Indonesian crude oil price in December 2021 was recorded to have decreased to US$ 73.36 per barrel from the previous US$ 80.13 per barrel.

Not only that, December SLC ICP also decreased by US$ 7.12 per month to US$ 73.03 per barrel from the previous month which reached US$ 80.15 per barrel.

Referring to Executive Summary The Indonesian Crude Oil Price Team, this decline was influenced, among other things, by market players who responded overreacted to the uncertainty of market conditions in line with the increase in Covid-19 cases.

Moreover, with the emergence of the Omicron variant, inflation, the release of strategic reserves and the continued increase in OPEC+ production as well as the strengthening of the US Dollar exchange rate against other major world currencies led to a decline in investor interest in oil commodities to the lowest level in several years and prompted profit taking while prices were still low. tall.

Other factors are the emergence of a new Covid-19 virus variant, Omicron, which spread rapidly in early December 2021 and the WHO’s designation of the Omicron Covid-19 virus variant as variant of concern in several regions such as South Africa, Europe, America, and Asia, causing countries in Europe such as the UK, Norway, Germany, Italy, Australia, Denmark and China to decide to re-implement activity restrictions.

“This has led to fears of a decline in economic activity and a decline in global crude oil demand as well as market expectations for OPEC+ to delay the decision to continue increasing oil production,” said Exsum.

Regarding oil supply/production and stock:

a. The EIA (Energy Information Administration) reported an increase in gasoline stocks by 7.3 million barrels to 222.7 million barrels compared to November 2021 stocks, in line with declining seasonal demand reinforced by tightening activities due to the spread of the omicron virus variant.

b. The IEA (International Energy Agency) in a December 2021 report stated that global crude oil supply exceeded demand, mainly due to increased US production in line with increased drilling activity and an increase in OPEC+ production by 450,000 barrels per day.

As for oil demand:

a. The IEA in a report in December 2021 stated that the average global demand for crude oil in 2021 decreased by 100,000 barrels per day compared to the previous month’s report due to an increase in Covid-19 cases which had an impact mainly on a decrease in flight activity and jet fuel consumption.

b. OPEC reports oil demand in Q4 2021 adjusted slightly lower mainly to take into account the Covid-19 containment measures in Europe and their potential impact on transport fuel demand, as well as the emergence of a new Covid-19 variant (Omicron). The total world oil demand is US$ 96.63 million barrel per day annually in 2021.

The decline in international crude oil prices was also influenced by the Bank of England announcing an unexpected increase in interest rates (this decision was the first among the developed countries of the G7 group to conduct monetary tightening since the Covid-19 pandemic) after Federal Reserve The US indicated the potential for accelerating the reduction of fiscal stimulus and raising interest rates earlier, to tackle inflation. These indications make the US Dollar more attractive to investors compared to the equity market.

“Rystad Energy estimates that global refinery throughput in Q4 2021 will be revised down by 400,000 barrels per day compared to the November 2021 report to an average of 78.7 million barrels per day,” according to the Exsum Indonesian Crude Oil Price Team.

For the Asia Pacific region, the decline in crude oil prices was caused not only by these factors, but also by continued expectations for the release of China’s strategic oil reserves, the decline in economic growth in the Asia Pacific region, especially in China and India, as well as the decline in crude oil imports in the Asia Pacific region. China and Japan.

The development of the average price of major crude oil on the international market in December 2021 compared to November 2021 is as follows:

  • Dated Brent fell by US$ 7.34 per barrel from US$ 81.44 per barrel to US$ 74.10 per barrel.
  • WTI (Nymex) fell by US$ 6.96 per barrel from US$ 78.65 per barrel to US$ 71.69 per barrel.
  • The OPEC basket fell by US$ 6.88 per barrel from US$ 80.37 per barrel to US$ 73.49 per barrel.
  • Brent (ICE) fell by US$ 6.05 per barrel from US$ 80.85 per barrel to US$ 74.80 per barrel.

[Gambas:Video CNBC]



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