Opec trims 2021 oil demand growth forecast

Opec has trimmed its global oil demand growth forecast by 80,000 b/d for 2021 on the back of slower economic growth projections for both OECD and non-OECD countries.

Demand is now forecast to rise by 6.54mn b/d to 96.84mn b/d in 2021, Opec said in its latest Monthly Oil Market Report (MOMR). Last month's report pegged next year's demand growth at 6.62mn b/d.

Opec expects all products to make some growth next year, given current low demand levels. But it warns that growth is likely to be capped by increased working from home and reduced travel, adding that risks related to Covid-19 remain a considerable concern.

Opec's demand forecast for this year is broadly unchanged from last month's MOMR, with consumption predicted to drop by 9.47mn b/d compared with 2019. A downwards revision to OECD demand in the second half of the year, driven by a "disappointing" recovery in transport fuel demand over the summer driving season, has been offset by an upwards revision to non-OECD demand, triggered by "better-than-expected data from China", the MOMR said.

On the supply side, Opec's forecast for non-Opec liquids output has been adjusted higher this year, but the pace of growth for next year has been trimmed. Non-Opec production is now expected to average 62.79mn b/d in 2020, which is down by 2.37mn b/d compared with last year. Last month's MOMR predicted a more severe drop of 2.68mn b/d this year. A key factor behind the revision is a higher than expected recovery in US output in July, partly offset by subsequent hurricane-related disruptions on the US Gulf coast.

Non-Opec output is forecast to rebound by 890,000 b/d next year, a slightly more moderate rise than last month's 1mn b/d projection. The main drivers for next year's non-Opec supply growth are forecast to be the US, Canada, Brazil, Norway, Ecuador, Qatar, Guyana, India and Russia.

The revised supply and demand projections leave the call on Opec crude at 22.35mn b/d this year and 27.93mn b/d in 2021, down by around 300,000 b/d and 200,000 b/d compared with last month's MOMR, respectively. Opec crude production averaged 23.84mn b/d in the third quarter, down from 25.59mn b/d in the previous three months and 28.25mn b/d in the first quarter, according to an average of secondary sources including Argus.

By James Keates