OPEC Forecasts Global Oil Demand Growth of 5.89mb/d for 2021

By Adedapo Adesanya

The Organisation of the Petroleum Exporting Countries (OPEC) in its latest forecast figures for March said the global oil demand will increase by 5.89 million barrels per day in 2021 compared to its estimate last month of 5.79 million barrels per day.

The cartel said in its Monthly Oil Market Report (MOMR) that it expects the demand recovery to be much stronger over the second half of 2021 as vaccines are now widely available and administered across the world.

In this month’s report, OPEC cut its oil demand estimate for the first quarter by 180,000 barrels per day and for the second quarter by 310,000 barrels per day compared to the February outlook.

The group is, however, choosing to see an improvement in the second half of the year, raising its estimates for the third and fourth quarters reflecting expectations for a stronger economic recovery with the positive impact of vaccination rollouts.

In the third quarter, OPEC now sees demand at 97.43 million barrels per day, up by 400,000 barrels per day compared to last month’s assessment.

For the fourth quarter, global oil demand is expected at 98.91 million barrels per day, up by nearly 1 million barrels per day – 970,000 barrels per day – compared to the estimate in February.

For the full year, OPEC expects oil demand to grow by 5.9 million barrels per day, up by 100,000 barrels per day compared with last month’s forecast.

Currently, the organisation expects total oil demand to reach 96.3 million barrels per day, with most consumption appearing in the second half of the year.

The ongoing lockdown measures in Europe could continue to weigh on demand in the short term. The group also revised higher its demand estimates for 2020 and reported that demand may have fallen by 9.6 million barrels per day last year, as against its previous estimates of 9.72 million barrels per day.

Lower demand for OPEC crude may keep the group from easing output cuts further over the next few months at least.

Earlier in the month, OPEC+ left output targets largely unchanged for April except for marginal increases for Russia and Kazakhstan.