Accelerating Oil Demand Will Reduce Global Congestion, OPEC Says

The rebound in global oil demand is expected to accelerate in the second half of 2021 as the world continues to burn off the supply glut it accumulated last year, the Organization of the Petroleum Exporting Countries said on Thursday. .

In its monthly market report, OPEC highlighted data showing that crude inventories in developed countries around the world had fallen to around 34 million barrels above the average level for 2015-19.

The Vienna-based organization’s technical committee has said in recent weeks that it expects global crude stocks to fall below the five-year average in the second half of the year. Thursday’s OPEC report confirmed its expectations that vaccination deployments, stimulus measures and pent-up demand will give momentum to a resurgence in oil demand.

The outlook recently prompted the cartel to continue to ease restrictions on oil production put in place last year as the world was on the verge of running out of places to store excess crude when the pandemic restrictions. hammered the demand.

The increase in the consumption of transportation fuels like gasoline means that oil demand will reach 99 million barrels per day in the second half of 2021, a 5% increase from its level in the first six months of the year. year, OPEC said. Demand in the fourth quarter is expected to be 99.82 million barrels per day, just 150,000 barrels below the 2019 pre-pandemic average.

Oil prices edged up Thursday, with Brent crude, the global benchmark, adding 0.4% to $ 72.52 a barrel. West Texas Intermediate futures, the US gauge, closed 0.5% higher at $ 70.29 per barrel. Both benchmarks have repeatedly broken multi-year highs in recent weeks, as global supply decreases and demand increases.

In its report, OPEC left its forecast that global oil demand would rebound by six million barrels per day in 2021 unchanged and maintained its estimate that global economic growth would increase by 5.5% this year.

But the cartel has shifted its supply growth expectations relative to its non-OPEC counterparts, raising its forecast from 100,000 barrels per day to 800,000 barrels per day. The increase is explained by a faster-than-expected recovery in US production, with production also increasing in other non-cartel producers such as Norway, China and Indonesia.

With crude consumption continuing to increase towards the middle of the year, “investment is expected to increase as the stabilization of crude oil markets is expected to add a further rise in some producing countries, including the United States,” the report said.

In addition to the expected rise in US production, investors in recent weeks have pointed to new variants of the coronavirus and the potential end of sanctions on Iranian oil supplies as threats to the recent resurgence of the oil market.

Iran’s oil supply rose again in May, climbing from 42,000 barrels per day to just under 2.5 million barrels per day, according to secondary data cited by OPEC. Analysts expect Iran to be able to add up to an additional 1.5 million barrels a day to global markets if talks between Tehran and world powers successfully revive a nuclear deal that would allow Iran to pump at will.

Write to David Hodari at David.Hodari@dowjones.com

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Appeared in the print edition of June 11, 2021 under the title “Oil demand rebound expected to accelerate.”


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Felix J. Dixon