OPEC again cuts 2021 oil demand forecast as virus cases rise

OPEC again cuts 2021 oil demand forecast as virus cases rise

World oil request will bounce back more gradually in 2021 than recently suspected as Covid cases rise, OPEC said on Tuesday, adding to headwinds looked by the gathering and its partners in adjusting the market.

 

Request will ascend by 6.54 million barrels for each day(bpd) one year from now to 96.84 million bpd; the Organization of the Petroleum Exporting Countries said in a month to month report. The development figure is 80,000 bpd not exactly expected a month back.

 

A further debilitating of interest could undermine plans by OPEC and partners to tighten in 2021; the record oil yield cuts they made for the current year.

 

OPEC is watching out for the circumstance however at present has no arrangement to drop the gracefully help.

 

“We accept this is the determined volume to provide food for the interest returning;” United Arab Emirates Energy Minister Suhail al-Mazrouei told the Energy Intelligence Forum on Tuesday, alluding to the 2021 yield increment.

 

Oil prices have collapsed as the coronavirus crisis curtailed travel and economic activity. While in the third quarter an easing of lockdowns allowed demand to recover; OPEC sees the pace of economic improvement slowing again.

 

“While the 3Q20 recovery in some economies was impressive, the near-term trend remains fragile, amid a variety of ongoing uncertainties; especially the near-term trajectory of COVID-19,” OPEC’s report said of the economic outlook.

 

 

ALSO READ: OPEC reports Nigeria’s oil imports exceeded exports by $58.5bn over 5yrs

 

 

“As this uncertainty looms large, amid a globally strong rise in infections; it is not expected that the considerable recovery in 3Q20 will continue into 4Q20 and in 2021.”

 

OPEC has steadily lowered its 2021 oil demand growth forecast from an initial 7 million bpd expected in July.

 

The group also cut its estimate of world oil demand in the current quarter by 220,000 bpd.

 

It left its estimate of the scale of this year’s historic contraction in oil use steady at 9.47 million bpd.

OPEC OUTPUT DOWN

 

To tackle the drop in demand, OPEC and its allies including Russia; a group known as OPEC+, agreed to a record supply cut of 9.7 million bpd starting on May 1.

 

The cut was tapered to 7.7 million bpd in August and OPEC+ plans further tapering next year by boosting supply by 2 million bpd from January.

 

In the report, OPEC said its output fell by 50,000 bpd to24.11 million bpd in September. That amounted to 104% compliance with the supply cut pledges; according to a Reuters calculation – up from August’s figure of 103%.

 

OPEC also forecast demand for its crude will be 200,000 bpd lower than expected next year at 27.93 million bpd.

 

Assuming global demand rebounds as expected; this in theory leaves room for OPEC members to increase output in 2021 by over 3.8 million bpd from September’s rate without causing a glut.

 

 

 

 

 

 

Source: Reuters

About The Author

Osigweh Lilian Oluchi is a graduate of the University of Lagos where she obtained a B.A (Hons) in English, Masters in Public and International affairs (MPIA). Currently works with 1stnews as a Database Manager / Writer. [email protected]

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