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Oil demand has already increased to 95 million barrels per day (bpd), and the market is rebalancing, according to the chief executive of the Abu Dhabi National Oil Company (ADNOC), Sultan Ahmed Al Jaber.
ADNOC pumps nearly all the oil in one of OPEC’s largest producers, the United Arab Emirates (UAE).
Speaking at the virtual Columbia Global Energy Summit, Al Jaber also noted—as carried by Reuters—that investments in oil and gas had declined in the past five years with companies sticking to capital discipline since the previous oil price crash and industry downturn in 2015-2016.
In its latest Monthly Oil Market Report, OPEC sees global oil demand at 94.79 million bpd in the second quarter this year, after revising down estimates by 300,000 bpd compared to its April estimate, due to lower-than-expected demand in North America in the first quarter and the COVID resurgence in India and Brazil.
However, the organization raised its outlook for oil demand for both the third and fourth quarters of 2021 by 150,000 bpd and 290,000 bpd, respectively. Third-quarter demand is expected to average 97.90 million bpd, and fourth-quarter demand is set to further rise to 99.74 million bpd, OPEC’s latest report said. The higher anticipated demand in the second half of this year is the result of positive fuel data from the United States, while “the acceleration in vaccination programs in many regions allows for optimism,” OPEC said.
As a whole, OPEC is optimistic that accelerating vaccination programs and rising fuel demand will raise average global oil demand by 5.95 million bpd in 2021 compared to 2020.
Earlier this week, Russia’s Deputy Prime Minister Alexander Novak said that the oil market is fairly balanced at present, with demand slightly exceeding supply.
The excess oil inventories of the past year have been all but depleted, and a strong demand rebound in the second half this year could lead to even steeper stock draws, the International Energy Agency (IEA) said in its report for May, keeping an upbeat forecast of global oil demand despite the weaker-than-expected first half of 2021.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com