Oil consumption will jump by about 5 million barrels a day — or roughly 5% — in the second half of 2021 versus the first as the world emerges from the pandemic slump, the Organization of Petroleum Exporting Countries forecast in a report. The estimates are little changed from a month ago.
“The recovery in global economic growth, and hence oil demand, are expected to gain momentum,” the group’s Vienna-based research department wrote. The need for transport fuels should climb as vaccination programs contain the virus, it said.
OPEC and its partners have restored almost 40% of the production they shuttered when the coronavirus crushed demand a year ago, and will gather on July 1 to consider reviving the remainder.
The 23-nation OPEC+ coalition has already indicated it expects world crude markets to become tight in the coming six months, while the International Energy Agency has warned of higher prices if the group doesn’t open the taps. Brent futures are trading above $70 a barrel in London.
Yet so far Saudi Arabian Energy Minister Prince Abdulaziz bin Salman has said he wants demand to be clearly manifest before the alliance raises supplies.
OPEC’s latest report reaffirms that there will be a substantial gap in the market for the producers to fill.
Demand for OPEC’s crude will average 29 million barrels a day in the final six months of the year, whereas the group’s 13 members pumped only 25.46 million a day in May, according to the report. Even if they proceed with an increase scheduled for July, they’ll be considerably below the level needed.
Oil inventories, which had ballooned when demand sank during last year’s crisis, are almost back to normal levels as a result of OPEC’s supply cutbacks. In April, stockpiles in developed nations stood just 34 million barrels over their average for the period of 2015 to 2019, according to the report.