You just never know where oil prices are going to go over the course of a year. From the negotiations regarding Iran’s nuclear program to concern over the economic impact of the pandemic to the weather, the factors affecting the price of oil in 2022 are as broad and unpredictable as ever.

Looking back on 2021, the closing price of a barrel of West Texas Intermediate crude went from $47.62 on January 4 to $84.65 on October 26 to $75.21 on December 31 (all figures in US dollars).

The annual average came in at a solid $68.12—much better than in 2020 when WTI averaged $39.52 and even closed in negative territory at one point.

The higher prices have pinched consumers, but have been a much-needed balm for the Alberta economy.

So what can we expect in 2022?

Notwithstanding one of the many moving parts changing the pattern literally overnight, robust global demand (which assumes the negative economic impact of the pandemic is kept in check) combined with relatively modest increases in OPEC+ production would see WTI end up averaging somewhere in the low $70s this year.

Some analysts have, however, argued that underinvestment in the development of new supply could cause prices to spike either temporarily or for several years.

For the record, the January 4, 2021 edition of The Owl argued: “if the pandemic is successfully thwarted by the vaccines and global oil demand improves, oil prices should edge higher in 2021.” They did “edge higher,” but by quite a bit more than our original forecast which was for WTI to average around $51 in 2021.

As always, we here at ATB Economics will be carefully watching the moving parts to see what actually happens and how it affects the Alberta economy.

Answer to the previous trivia question: At 7,220, Ontario was the province from which the most people moved to Alberta during the third quarter of 2021.

Today’s trivia question: U.S. oil production is divided into five “PADDs.” What is a PADD?