OPEC says its outlook for the oil market continues to be clouded by pandemic fears

An oil pumping jack, often known 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 Pictures

LONDON — Oil producer group OPEC on Thursday stored its 2021 forecast for world crude demand progress unchanged, however warned uncertainties over the influence of the coronavirus pandemic stay excessive.

The intently watched oil market report comes as Covid instances proceed to surge worldwide, with new lockdowns imposed in Europe and elements of China.

In current weeks, optimism in regards to the mass rollout of coronavirus vaccines seems to have been tempered by the resurgent fee of virus unfold.

It has resulted in oil producers making an attempt 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 influence of the pandemic on shopper habits,” OPEC stated Thursday.

“These may even embody what number of international locations are adapting lockdown measures, and for the way lengthy. On the similar 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 12 months on 12 months 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 12 months on 12 months 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 bettering labour market and better car gross sales than in 2020.”

“Accordingly, oil demand is anticipated to rise steadily this 12 months 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+, lower oil manufacturing by a document quantity in 2020 in an effort to assist 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 build up.

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 futures stood at $52.76, round 0.3% decrease. Oil costs are at present on tempo for his or her third consecutive week of features.

“Anybody who retains his or her finger on the heartbeat of the oil market is aware of that costs are at present pushed by expectations and never by quick realities,” Tamas Varga, senior analyst at PVM Oil Associates, stated in a analysis observe.

“Those that disagree are advisable to have a fast have 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 forecasters, together with the Worldwide Vitality Company and the U.S. Vitality Data Administration, have additionally downgraded their oil demand progress estimates for 2021 in current weeks.

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