OPEC Cuts 2021 Oil Demand Outlook; still sees a big market deficit until the end of the year

Strong points

Call for OPEC crude to hit 29.57 mil bpd in fourth quarter

Non-OPEC supply forecast unchanged from last month

Many members report October production below quota

Under fire for curbing production as prices soared, OPEC on November 11 lowered its 2021 global oil demand forecast by 160,000 bpd, citing weaker economic factors in China and the United States. India, but said the market would remain tight for the rest of the year .

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OPEC crude demand is expected to average 29.57 million b/d in the fourth quarter, well above the block’s production of 27.45 million b/d for October, the organization said in its statement. closely watched oil market report.

Even though OPEC plans to increase production in concert with Russia and eight other allies by a combined 400,000 bpd each month, volumes would not be sufficient to meet global demand, the United States, Japan and India being among the consumer countries complaining for the group. to release more supplies.

But in the first quarter of 2022, seasonal factors will push OPEC’s crude call down to 26.81 million bpd, the report said, and ministers said they would rather be cautious than aggressive on production, with a likely market surplus to come. .

The alliance then meets on December 2 to decide on January production levels.

OPEC and its allies “will continue to regularly review market conditions, reaffirming the participating countries’ commitment to ensuring adequate supply and supporting efforts to maintain stability in the global oil market,” the report said.

In its analysis, OPEC noted a 12% rise in crude oil spot prices in October, attributed to “strong oil market fundamentals, compounded by expectations of higher oil demand in the coming months.” winter of the “gas-to-oil transition”.


Insufficient quotas

Robust demand as the world continues to recover from the pandemic has reduced OECD commercial oil stocks to 2.805 billion barrels, about 163 million barrels below the 2015-19 average that the OPEC+ alliance said aim.

However, the report pointed out that China has reinstated lockdown measures in some regions to contain rising COVID-19 cases, while cost-conscious Indian consumers are likely to cut back on oil consumption amid price spike.

As a result, OPEC now expects global oil demand to average 96.44 million bpd in 2021, for annual growth of 5.65 million bpd. For 2022, demand will increase by 4.15 million bpd, unchanged from last month’s forecast, to 100.59 million bpd.

Its non-OPEC production forecast remained unchanged from last month’s report, at 63.64 million bpd for 2021, up 660,000 bpd year-on-year, and at 66.66 million bpd. d for 2022, up 3.02 million bpd.

The report also continues to indicate that many OPEC members are struggling to meet their production quotas, which has contributed to the recent market tightening.

For example, Angola self-declared October crude production of 1.11m bpd, well below its 1.36m bpd allocation, while Nigeria self-declared October crude production. reported 1.23 million b/d, well below its cap of 1.63 million b/d.

OPEC kingpin Saudi Arabia said it pumped 9.78 million bpd, the report said, just short of its quota of 9.81 million bpd.


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Felix J. Dixon