OPEC raises 2021 oil demand growth forecast on hope pandemic wanes

OPEC on Tuesday raised its forecast for growth in world oil demand this year on expectations the pandemic will subside, providing help for the group and its allies in their efforts to support the market. Demand will rise by 5.95 million barrels per day (bpd) in 2021, or 6.6%, the Organization of the Petroleum Exporting Countries forecast in its monthly report. That is up 70,000 bpd from last month. “As the spread and intensity of the COVID-19 pandemic are expected to subside with the ongoing rollout of vaccination programmes, social distancing requirements and travel limitations are likely to be scaled back, offering increased mobility,” OPEC said in the report.

The upward revision marks a change of tone from previous months, in which OPEC has lowered demand forecasts because of continued lockdowns. A further recovery could bolster the case for OPEC and its allies, known as OPEC+, to unwind more of last year’s record oil output cuts. Oil gained further towards $64 a barrel after the report was released on Tuesday. Prices have risen to pre-pandemic highs above $70 this year, boosted by anticipation of economic recovery and OPEC+ supply restraint.

OPEC+ agreed on April 1 to ease oil output cuts gradually from May, after the new U.S. administration called on Saudi Arabia to keep energy affordable for consumers. The report also showed higher OPEC oil output already as Iran, exempt from making voluntary cuts because of U.S. sanctions, pumped more in March, driving a 200,000 bpd rise in the group’s output to 25.04 million bpd. OPEC+ cut supply by a record 9.7 million bpd last year to support the market as demand collapsed. Most of those curbs remain in place even after the April 1 decision. OPEC+ holds its next policy meeting on April 28.

OPEC raises 2021 oil demand growth forecast on hope pandemic wanes, CNBC, Apr 14