OPEC+ Still Sees Oil Demand Growing By 6 Million Bpd In 2021

The Joint Technical Committee (JTC) of the OPEC+ group maintained at a meeting on Monday its outlook for global oil demand growth at around 6 million barrels per day (bpd) this year, two OPEC+ sources told Reuters.

The committee meets ahead of the monthly ministerial meetings of the OPEC+ alliance and takes stock of the market developments, inventories, and compliance rates, and, when asked, gives recommendations for policy actions to the meetings of the ministers the following days.

OPEC itself said in its Monthly Oil Market Report in May that it was optimistic that accelerating vaccination programs and rising fuel demand would raise global oil demand by 5.95 million bpd this year despite the COVID crisis in India, and kept its demand outlook unchanged from April.

The JTC meeting precedes the meeting of the Joint Ministerial Monitoring Committee (JMMC), which is scheduled to take place on Tuesday, June 1.

At tomorrow’s meeting, the OPEC+ group is expected to confirm its May-July plan to ease the oil production cuts by the planned 840,000 bpd in July, OPEC+ delegates and two dozen analysts told Bloomberg News last week.

At present, no surprises are expected, despite this year’s track record of decisions surprising the market to both the bullish and bearish sides.

The collective OPEC+ oil production is set to rise by 350,000 bpd in both May and June and by more than 400,000 bpd in July. Additionally, Saudi Arabia is also gradually easing its extra unilateral cut of 1 million bpd over the course of the next few months, beginning with monthly production increases of 250,000 bpd in both May and June.

Overall, OPEC+ is expected to return to the market as much as 2.1 million bpd by July. 

The decision from early April signaled the confidence of the leaders of the OPEC+ alliance that the market would be able to absorb that much supply as vaccination programs are accelerating and people start traveling more. OPEC+ and all analysts expect global oil demand to rebound strongly in the second half of 2021 and nearly reach pre-crisis levels by the end of the fourth quarter this year.

By Charles Kennedy for Oilprice.com

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