Global oil demand is set to benefit from stronger economic recovery and vaccinations in the second half of this year, OPEC said in its report released on Thursday.
The cartel, however, revised down in its Monthly Oil Market Report (MOMR) its estimates for global oil demand for the first half of the year due to extended lockdowns in major economies in Europe and high unemployment rates in the United States slowing the recovery.
In hindsight, the OPEC+ group’s decision from last week not to lift collective crude oil production from April, leaving only small exemptions to Russia and Kazakhstan, seems not so surprising after all, as the cartel sees now oil demand in the first and second quarters of 2021 lower than in last month’s assessment.
In this month’s report, OPEC cut its oil demand estimate for Q1 by 180,000 bpd, and for Q2 by 310,000 bpd compared to the February outlook.
The cartel is much more bullish about the second half of the year, and raised its estimates for Q3 and Q4 demand, “reflecting expectations for a stronger economic recovery with the positive impact of vaccination rollouts.”
In the third quarter, OPEC now sees demand at 97.43 million bpd, up by 400,000 bpd compared to last month’s assessment. For the fourth quarter, global oil demand is expected at 98.91 million bpd, up by nearly 1 million bpd – 970,000 bpd – compared to the estimate in February. For the full year, OPEC expects oil demand to grow by 5.9 million bpd, up by 100,000 bpd compared with last month’s forecast.
Currently, the organisation expects total oil demand to reach 96.3 million bpd, with most consumption appearing in the second half of the year. The base assumption for OPEC’s bullish view for H2 is that by the beginning of the second half of 2021, “the pandemic will largely be contained with the majority of the population in western economies vaccinated, with Covid-19 not posing a major obstacle for emerging and developing economies.”
“However, this year’s demand growth will not be able to compensate for the major shortfall from 2020, as mobility is forecast to remain impaired throughout 2021,” OPEC said.
