An OPEC+ panel advising the group has revised down its global oil demand forecast for 2021 by 300,000 barrels per day (bpd) in light of the renewed lockdowns in Europe amid a third wave of the pandemic, Reuters reported on Wednesday, citing a report from the Joint Technical Committee (JTC) it had seen.
The committee met on Tuesday, beginning the monthly OPEC+ meetings that are expected to decide how the alliance will proceed with the production cuts in May.
“The most recent edition of OPEC’s Monthly Oil Market Report projecting growth of 5.1 per cent in 2021, while world oil demand is estimated to rise by 5.9 mb/d,” OPEC said at the end of the meeting.
But the JTC’s base-case scenario, according to the report Reuters has seen, now forecasts demand growth of 5.6 million bpd, down by 300,000 bpd.
Global oil supply, on the other hand, is set to rise by 1.6 million bpd this year, the JTC now expects. This is 200,000 bpd higher than its previous supply growth estimate.
At the JTC meeting, OPEC Secretary General Mohammad Barkindo “expressed cautious optimism about the positive trajectory of the recovery in the oil market and global economy,” OPEC said. Related: Oil Prices Fall As Bearish Sentiment Returns
One of the Arab Gulf members of OPEC, Kuwait, also said on Wednesday that it was “cautiously optimistic” about global oil demand growth this year, its Oil Minister, Mohammad Abdulatif al-Fares, said, as per Kuwait’s state news agency KUNA. Kuwait reiterated its full support to OPEC+ efforts to rebalance the market, the minister added.
The “cautious optimism” messages coming from OPEC and the OPEC+ group this week suggest that the group is more likely than not to roll over the current cuts into May, analysts say.
Russia is reportedly favoring a rollover of the alliance’s oil production cuts, but it is seeking a slight increase for itself to meet higher domestic seasonal demand, a source with knowledge of Moscow’s plans told Reuters on Monday.
OPEC’s top producer and de facto leader, Saudi Arabia, is also reportedly ready to extend current OPEC+ production cuts over May and June and also keep cutting 1 million bpd in oil output unilaterally, according to an unnamed source who spoke to Reuters.
By Tsvetana Paraskova for Oilprice.com
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