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LONDON, Nov. 11 (Reuters) – OPEC on Thursday cut its forecast for global oil demand for the last quarter of 2021 as high energy prices hamper recovery from COVID-19, delaying the timing of a return to oil use levels before the pandemic until later in 2022.
The Organization of the Petroleum Exporting Countries in a monthly report also raised its forecast for supplies to U.S. shale producers next year, a potential headwind for the efforts of the group and its allies, known as OPEC +, to balance the market.
OPEC said it expects demand for oil to average 99.49 million barrels per day (bpd) in the fourth quarter of 2021, down 330,000 bpd from last month’s forecast. . Demand growth forecast for the year has been reduced from 160,000 bpd to 5.65 million bpd.
“A slower pace of recovery in the fourth quarter of 2021 is now assumed due to high energy prices,” OPEC said in the report. OPEC also cited slower-than-expected demand in China and India for the downgrade.
Oil has peaked in three years above $ 86 a barrel this year, as OPEC + only gradually increases supply and demand, pushing prices at the pump to the highest in years on some markets. The prices of natural gas, electricity and coal have also skyrocketed.
Governments, businesses and traders are keeping a close watch on how quickly demand is picking up. A slower pace could ease the upward pressure on prices and reinforce the idea that the impact of the pandemic will definitely dampen demand.
OPEC now sees global consumption surpass the 100 million barrels per day mark in the third quarter of 2022, three months later than expected last month. On an annual basis according to OPEC, the world last used more than 100 million barrels per day of oil in 2019.
The grower group stuck to its forecast that demand will increase by 4.15 million bpd next year. This will bring consumption to an average of 100.6 million barrels per day, above the 2019 level.
Oil was little changed just below $ 83 a barrel after the report was released, up from an earlier decline.
SHALE REBOUND SEEN
The report also showed higher OPEC production and forecast an increase in supplies to U.S. shale producers in 2022.
OPEC + is gradually unwinding the record production cuts implemented last year. In July, the group made a commitment to gradually increase its production by 400,000 bpd per month from August.
The report showed that OPEC’s production rose 220,000 b / d in October to 27.45 million b / d, with Saudi Arabia’s top producer providing half of the increase. Four of OPEC’s 13 members pumped less due to lack of capacity.
OPEC predicts that U.S. tight reservoir oil production, another term for shale, will increase by 610,000 bpd in 2022, up 200,000 bpd from last month’s forecast after a contraction this year, with higher prices prompting more investment.
Nonetheless, OPEC left its growth forecast for the overall non-OPEC supply in 2022 stable due to downward revisions at other producers.
With weaker demand now seen, OPEC expects the world to need 28.7 million bpd from its members in 2022, down 100,000 bpd from last month, but still allowing for a higher OPEC production.
Reporting by Alex Lawler; Editing by Jan Harvey, Elaine Hardcastle
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