Opec lifts 2Q oil demand estimate, FY growth unchanged

Opec has kept its forecast for global oil demand growth unchanged for this year, with an upwards revision to second-quarter consumption offsetting a downwards adjustment to the first-quarter estimate.

The group's latest Monthly Oil Market Report (MOMR) puts global oil demand at 96.58mn b/d this year, slightly higher than its previous forecast of 96.46mn b/d. But a small upwards revision to the 2020 demand estimate leaves year-on-year growth unchanged at 5.95mn b/d in 2021.

Lower-than-expected data from OECD Americas and Europe pushed Opec's estimate of global demand in the first quarter to 92.93mn b/d, down by 360,000 b/d from its previous report. But this is more than offset by an increase in the group's second-quarter forecast to 95.26mn b/d, up by 470,000 b/d from last month's estimate on the back of easing Covid-19 restrictions and borders reopening.

Opec expects to see a further rise in consumption in the third and fourth quarters, with demand forecast to reach a respective 98.18mn b/d and 99.82mn b/d. But the pace of the recovery hinges on the path of the Covid-19 pandemic and the progress of vaccination programmes, it says.

The group has revised up its demand forecasts for India this year to 5mn b/d from 4.88mn b/d in last month's report, based on higher demand in the second and third quarters than previously anticipated, although it highlights that uncertainty remains high.

The report sees non-Opec liquids supply at 63.73mn b/d this year, up by 840,000 b/d compared with last year. The is 130,000 b/d higher than last month's forecast, driven by a faster-than-expected recovery in US production in March. Opec has revised higher its 2021 supply forecast for Norway, China and Indonesia, while lowering its projection for the UK, Brazil and Colombia.

It has kept the projected call on its own members' crude unchanged for 2021 at 27.66mn b/d, almost 5mn b/d higher than in 2020. Opec crude production averaged 25.46mn b/d in May, up by 390,000 b/d on the year, according to an average of secondary sources including Argus.

Citing preliminary data, Opec said that OECD commercial stocks fell by 6.4mn bl in April from March to 2.962bn bl. This is 160mn bl lower than a year earlier and 34mn bl above the 2015-19 average.

By Rowena Edwards