By Adedapo Adesanya
Crude oil prices dropped yet again on Wednesday as the Organisation of the Petroleum Exporting Countries (OPEC) revised downward its 2021 estimate for oil demand.
Brent crude lost 17 cents or 0.2 per cent to trade at $83.25 per barrel, while the United States West Texas Intermediate (WTI) lost 11 cents or 0.14 per cent to sell for $80.53 per barrel.
The cartel expects this year’s global oil demand to grow by 5.8 million barrels per day from the low 2020 levels, down from last month’s estimate of 5.96 million barrels per day annual growth.
In its closely watched Monthly Oil Market Report (MOMR) released yesterday, the oil group kept its 2022 oil demand growth forecast unchanged at 4.2 million barrels per day to the average total global demand of 100.8 million barrels per day next year.
Last month, OPEC had raised its 2022 oil demand forecast by 900,000 barrels per day, expecting the surge of the Delta variant to partially delay the oil demand recovery into the next year with robust economic growth and stronger recovery in fuel consumption.
In this month’s report, OPEC revised downward its 2021 estimate due to lower-than-expected actual data for the first three quarters of the year despite healthy oil demand assumptions going into the final quarter of the year.
In the report, it was noted that global oil demand in the fourth quarter will be driven by a seasonal increase in petrochemical and heating fuel demand, as well as the potential switch from natural gas to petroleum products due to the high gas prices, the cartel noted.
In recent weeks, there has been growing interest in switching from gas to oil, and OPEC said that if this trend continues, fuels such as fuel oil, diesel, and naphtha could see support, driven by higher demand from power generation, refining and petrochemical use.
Shortages of coal and natural gas in China, Europe and India have boosted prices for the fuels burned for electricity generation. Oil products are being used as a substitute.
The European Commission outlined measures the European Union could use to combat surging energy prices and said it would explore joint gas purchasing among countries.
Meanwhile, Russian President, Mr Vladimir Putin said oil prices could reach $100 a barrel and noted that the country was ready to provide more natural gas to Europe if requested.
Data from the American Petroleum Institute, an industry group was delayed on Wednesday and the official inventories figure from the US Energy Information Administration (EIA) will be released on Thursday. The data was delayed by a day following the Columbus Day holiday on Monday.
