By Adedapo Adesanya
The Organisation of the Petroleum Exporting Countries (OPEC) has revised down its global oil demand growth forecast for 2021 as a result of uncertainty surrounding the COVID-19 pandemic despite the roll-out of vaccines in several countries.
The oil cartel in its latest Monthly Oil Market Report (MOMR) forecast that demand will total 95.89 million barrels per day next year in contrast to its previous forecast of 96.26 million barrels per day.
The downward revision reflects the uncertainty surrounding the impact of COVID-19 on transportation fuels in the Organisation for Economic Co-operation and Development (OECD) economies in the first half of next year.
OPEC estimates their recovery to be capped at 2019 levels and forecasts for a mild winter in the northern hemisphere are pressuring the outlook for middle distillates demand.
Economic growth next year and the related impact on oil demand recovery depends on uncertainties surrounding the pandemic, policies of the incoming US administrations, Brexit and trade negotiations, the cartel said.
Recent news regarding vaccination programmes in most major economies provides upside to next year’s GDP growth forecast of 4.4 per cent.
The UK became the first country to start rolling out the COVID-19 vaccine that US firm Pfizer has developed with Germany’s Biontech earlier this month.
The organisation assumes vaccines will be gradually available globally by the second half of 2021. It said, “Earlier availability would allow a faster-than-anticipated move towards normalisation,” the report said.
Lower transportation fuel demand in the US and OECD Europe led to a downward revision in OPEC’s demand forecast for 2020, which is now pegged at 89.99 million barrels per day, 9.77 million barrels per day lower than 2019. In November, the OPEC report predicted a 9.75 million barrels per day drop in this year’s consumption.
On the supply side, non-OPEC liquids have been revised lower for this year and for 2021. Non-OPEC supply is now expected to average 62.67 million barrels per day this year, down by 2.5 million barrels per day from 2019.
Last month’s report estimated a 2.43 million barrels per day drop to 62.73 million barrels per day. This change reflects lower-than-expected output in the fourth quarter of 2020, mainly in the US, partially offset by revisions to output in Russia and Canada.
Non-OPEC supply is forecast to rebound by 850,000 b/d to average 63.52 million barrels per day next year, a slower pace of growth than the 950,000 barrels per day increase predicted in last month’s MOMR.
“This is mainly due to downward revisions to Russia, following the new decision taken at the recent ministerial meeting of the OPEC and Non-OPEC countries participating in the declaration of co-operation,” the report said.
The trimmed Non-OPEC supply forecast for this year has resulted in an upward revision to the call on OPEC members’ own crude, which is now estimated at 22.2 million barrels per day in 2020, down by 7.1 million barrels per day from 2019. But the forecast call on OPEC crude for next year has been revised down by almost 200,000 barrels per day from last month’s report, to 27.17 million barrels per day.
OPEC crude production averaged 25.11 million barrels per day in November, up by 707,000 barrels per day from October.
