The Secretary General- H.E. Mohammad S. Barkindo- of OPEC and non-OPEC partners, a group sometimes called OPEC+ has intimated that demand for the ‘black gold’ is not expected to assume 2019 levels until 2022.
Against this backdrop, he hinted that members must remain cautious in their expectations and assume a prudent path for demand outlook.
He opined that although global GDP is taking shape as a result of vaccine rollouts, there are many limitations and blockades to the recovery.
Consequently, he cited further lockdowns; the uneven rollout of vaccines across the globe; the prevalence of COVID-19 variants; sovereign debt levels; and inflationary pressures and central bank responses.
He made these remarks ahead of the OPEC+ ministerial meeting today, April 1, 2021.
Oil demand Outlook
According to the Secretary General of OPEC+, global oil demand is slightly lower at 5.6mb/d compared with a 9.6 mb/d contraction in 2020. Albeit he noted that there is evidence of a divergence between the first and second half of 2021.
“The first half has again been adjusted lower, primarily on the back of extended measures and new lockdowns in many key parts of Europe.
“Oil demand growth in the second half, however, remains intact. This reflects prospects for a stronger economic recovery with the positive impact of further vaccination rollouts. What the economic and demand outlook are showing us is that we need to be watchful, and tread a prudent path.”
H.E. Mohammad Sanusi Barkindo, OPEC Sec. General
Similarly, the chairman of OPEC+, HRH Prince Abdul Bin Salman noted that:
“Last month, we called for a cautious and restrained approach, and – unfortunately – we have been proved right by subsequent developments. Those who said we were behind the curve and not being responsive to the needs of the market have now recognized that OPEC+ cautious position was the correct course of action.
HRH Prince Abdul Bin Salman, Chairman of OPEC+
“We should all act in humility and recognize the limitations of our predictive powers in the face of unprecedented conditions.
“In today’s uncertain environment, charting a rigid path to recovery is unwise.
“The reality remains that the global picture is far from even, and the recovery is far from complete.”
Oil Supply Outlook
On the supply side, however, non-OPEC liquids is forecast to grow by about 1mb/d in 2021, compared to a forecast of 0.7mb/d during the last meeting of the cartel.
Furthermore, H.E. Mohammad Barkindo noted that, a critical development is that US oil supply forecast remains unchanged, with growth of 0.16 mb/d in 2021.
Available data for February 2021 inventory shows a decline in OECD commercial oil quantities of about 45 mb. This follows a drop in commercial oil quantities of about 14 mb and the February level is 95 mb than same time in previous year, he indicated. He opined that this level was 58 mb above the average for the period 2015-2019.
Oil inventories have further aligned excellently to production adjustments from the Declaration of Cooperation participants, he posited.
“The large and generous additional commitment of 1 mb/d for February, March and April from the Kingdom of Saudi Arabia has also been instrumental in the rebalancing process, and in helping achieve a more stable market.”
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