The Organisation of the Petroleum Exporting Countries (OPEC) has lowered its oil demand forecast for 2021 again, according to the latest version of the Monthly Oil Market Report released on Monday.
OPEC now expects global oil demand to fall by 9.77 million barrels per day in 2020 to reach 89.99 million barrels per day while expectations for 2021 were lowered to 95.89mbpd from 96.26mbpd.
Similarly, the International Energy Agency (IEA) modestly cuts its estimates for 2020 and 2021 despite a recent rally in crude futures as the looming uncertainty over the efficacy, availability and distribution of COVID-19 vaccines continues. This is expected to keep oil demand weak in the short-term.
Though Nigeria’s production for November dropped to 1.472mbpd, the Federal Government is assuming an oil production of 1.86 million b/d and a benchmark price of $40 per barrel for the 2021 budget.
The IEA, in its latest monthly oil market report published yesterday said it “will be several months before we reach a critical mass of vaccinated, economically active people and thus see an impact on oil demand.”
But the Paris-based agency admitted that stronger Asian demand and persistent and effective OPEC+ supply management had aided the recent recovery in oil prices and on the physical oil markets.
The IEA now expects global crude oil stocks to return to pre-pandemic levels by December 2021 “as the 1.7 million b/d build in 2020 is followed by 1.8 million b/d draw in 2021.”
OPEC’s projections for 2021 oil demand is 95.89 million bpd down 410,000 from its projection of 96.3 million bpd that the group made in its November MOMR, and 96.8 million bpd that it made in its October MOMR.
Meanwhile, OPEC’s oil production increased in November, according to the latest MOMR, adding 707,000 bpd on average. This is mostly from Libya’s non-compliance with the production quota, which accounted for 656,000 bpd increase.
Production increases were also seen from Iran (+39,000 bpd), the UAE (+75,000 bpd), and Venezuela (+25,000 bpd).
OPEC has agreed to lift production by 500,000 bpd next year and will re-evaluate where the market is to determine the next month’s quota. OPEC will hold their next meeting on January 4.
Libya has voiced its plans to increase its oil production and has previously stated that it will not accept any production quota until such a point when it can reliably produce 1.7 million bpd compared to its current 1.108 million bpd.
Iran, too, has promised to increase its oil production to 2.3 million bpd in 2021, up from 1.986 million bpd now.
OPEC estimated that overall, global liquids production in November increased by 1.62 million bpd over October, to average 92.53 million bpd.
Oil prices were trading up yesterday, with WTI trading up 0.04 per cent at $47.01 at 12:48 p.m. WAT, with Brent up 0.02 per cent at $50.30 – still holding above $50 per barrel, despite increased production and decreased oil demand prospects. Nigeria’s Bonny Light traded lower at $49.45 per barrel.