An oil pumping jack, also referred to as a “nodding donkey”, in an oilfield close to Dyurtyuli, within the Republic of Bashkortostan, Russia, on Thursday, Nov. 19, 2020.
Andrey Rudakov | Bloomberg | Getty Photos
LONDON — Oil producer group OPEC on Thursday stored its 2021 forecast for world oil demand progress unchanged, however warned uncertainties over the affect of the coronavirus pandemic stay excessive.
The closely-watched oil market report comes as coronavirus instances proceed to surge worldwide, with new lockdowns imposed in Europe and elements of China.
In latest weeks, optimism concerning the mass rollout of coronavirus vaccines seems to have been tempered by the resurgent price of virus unfold.
It has resulted in oil producers attempting to orchestrate a fragile balancing act between provide and demand as elements together with the tempo of the pandemic response proceed to cloud the outlook.
“Uncertainties stay excessive going ahead with the primary draw back dangers being points associated to COVID-19 containment measures and the affect of the pandemic on shopper conduct,” OPEC stated on Thursday.
“These will even embrace what number of international locations are adapting lockdown measures, and for the way lengthy. On the identical time, faster vaccination plans and a restoration in shopper confidence present some upside optimism.”
The 13-member group stated it anticipated world oil demand in 2021 to extend by 5.9 million barrels per day year-on-year to common 95.9 million barrels per day. The forecast was unchanged from final month’s evaluation.
The group stated world oil demand progress in 2020 declined by 9.8 million barrels per day year-on-year to common 90 million barrels per day. The group famous the autumn was marginally lower than anticipated in December.
OPEC stated its 2021 forecasts “assume a wholesome restoration in financial actions together with industrial manufacturing, an enhancing labour market and better automobile gross sales than in 2020.”
“Accordingly, oil demand is anticipated to rise steadily this yr supported primarily by transportation and industrial fuels,” the group stated.
Oil costs ‘pushed by expectations’
OPEC and its non-OPEC allies, an alliance typically known as OPEC+, reduce oil manufacturing by a document quantity in 2020 in an effort to help costs, as strict public well being measures worldwide coincided with a gas demand shock.
OPEC+ initially agreed to chop output by 9.7 million bpd, earlier than easing cuts to 7.7 million and ultimately scaling again additional to 7.2 million from January. OPEC kingpin Saudi Arabia has since stated it plans to chop output by an additional 1 million barrels per day in February and March to cease inventories from increase.
Worldwide benchmark Brent crude futures traded at $55.77 a barrel on Thursday, down 0.5% for the session, whereas U.S. West Texas Intermediate (WTI) futures stood at $52.76, round 0.3% decrease. Oil costs are at present on tempo for his or her third consecutive week of beneficial properties.
“Anybody who retains his or her finger on the heart beat of the oil market is aware of that costs are at present pushed by expectations and never by instant realities,” Tamas Varga, senior analyst at PVM Oil Associates, stated in a analysis word.
“Those that disagree are really helpful to have a fast take a look at the forecasts of H1 2021 oil demand over the previous few months and evaluate these estimates with value developments,” he added.
Forward of Thursday’s publication of its oil market report, OPEC had steadily lowered its demand progress forecasts for 2021.
Different main oil forecasters, together with the Worldwide Power Company and the U.S. Power Data Administration, have additionally downgraded their oil demand progress estimates for 2021 in latest weeks.