OPEC Maintains Forecast of 5.9mbpd Oil Demand Growth in 2021
By Adedapo Adesanya
The Organisation of the Petroleum Exporting Countries (OPEC) has maintained its forecast for global oil demand growth but warned uncertainties over the impact of the coronavirus pandemic remains high.
The closely-watched oil market report released today comes as coronavirus cases continue to surge worldwide, with new lockdowns imposed in Europe and parts of China.
The 13-member group said it expects global oil demand in 2021 to increase by 5.9 million barrels per day year-on-year to average 95.9 million barrels per day. The forecast was unchanged from last month’s assessment.
The group also said world oil demand growth in 2020 declined by 9.8 million barrels per day year-on-year to average 90 million barrels per day. The group noted the fall was marginally less than expected in December.
The cartel said its 2021 forecasts assume a healthy recovery in economic activities including industrial production, an improving labour market and higher vehicle sales than in 2020.
“Accordingly, oil demand is anticipated to rise steadily this year supported primarily by transportation and industrial fuels.
“Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behaviour.
“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism,” OPEC said on Thursday.
In recent weeks, optimism about the mass rollout of coronavirus vaccines appears to have been calmed by the resurgent rate of virus spread. This has led to oil producers trying to find a balancing act between supply and demand.
OPEC and its non-OPEC allies (OPEC+) cut oil production by a record amount in 2020 in an effort to support prices, as strict public health measures worldwide coincided with a fuel demand shock.
OPEC+ initially agreed to cut output by 9.7 million barrels per day before easing cuts to 7.7 million and eventually agreed this month to further reduce to 7.2 million from January.
OPEC leader Saudi Arabia has since said it plans to cut output by an extra 1 million barrels per day in February and March to stop inventories from building up.