Why is the Core Lithium share price gaining today?

The Core Lithium Ltd (ASX: CXO) share price is regaining some lost ground today.

In the past week, the lithium producer's shares fell by almost 10% on the back of volatility on the ASX.

However, as the broader market struggles to keep afloat during early afternoon trade, Core Lithium shares are 1.39% in the green at $1.46 apiece at the time of writing. They've lost some ground from their earlier intraday high of $1.51 a share, a 4.86% rise.

For context, the S&P/ASX 200 Index (ASX: XJO) is down 0.25% to 6,722.1 points.

Let's take a look at what might be going on.

What's driving Core Lithium shares higher?

It appears that bargain hunters are snapping up Core Lithium shares after their heavy falls in the prior week.

Despite the company no making any announcements since its extended offtake agreement with Tesla late last month, it seems investor confidence remains high in the lithium sector.

This follows a recent International Energy Agency report that anticipates lithium demand to accelerate more than 40 times over the next two decades.

In addition, graphite, cobalt, and nickel are expected to follow suit, with demand growing to about 20-25 times.

Core Lithium is well positioned to be Australia's next lithium producer, developing the Finniss Lithium Project near the Darwin port. This is regarded as the most capital-efficient and lowest-cost spodumene lithium project in the country.

The company has already established binding offtake and is in the process of finalising further agreements within the industry.

Core Lithium expects to have first production of lithium concentrate in Q4 2022. Once online, the Finniss Lithium Project will be the first Australian lithium-producing mine outside of Western Australia.

Core Lithium share price snapshot

While it has been a rollercoaster over the past three months, the Core Lithium share price is up 150% for 2022.

When looking at the past 12 months, the company's shares are up a mammoth 220%.

Based on today's price, Core Lithium has a market capitalisation of approximately $2.5 billion.