Opec lifts forecast call on its crude

Opec has raised the forecast call on its members' crude this year by over 200,000 b/d after trimming its projection for non-Opec supply by a similar amount and keeping its global oil demand estimate unchanged.

Opec now expects demand for its own crude to average 27.65mn b/d in 2021, almost 5.2mn b/d higher than last year and around 2.7mn b/d higher than Argus' estimate of the group's April production. Call on Opec crude is projected to rise from 26.48mn b/d in the second quarter to 28.7mn b/d in the third and 29.54mn b/d in the fourth, according to the organisation's latest Monthly Oil Market Report (MOMR).

The upward revision is underpinned by a downgrade in the group's forecast for non-Opec supply, which it now expects to grow by 700,000 b/d to 63.6mn b/d. Last month's report projected a 930,000 b/d rise to 63.83mn b/d. Growth forecasts have been revised down for the US, Norway, Canada and Brazil.

Opec sees US crude output dropping by 280,000 b/d this year, compared with its previous forecast for a 70,000 b/d decline. The Permian basin is the only US tight oil play expected to see any output growth this year, building on a 140,000 b/d increase in 2020. Last year's growth in the Permian came in the face of sharply lower oil prices and indicates that "some US tight crude production may have become more resilient to a lower oil price environment", Opec said.

On the demand side, Opec has kept its overall forecast unchanged from last month's MOMR. It expects global oil demand to grow by 5.95mn b/d to 96.46mn b/d this year, partly reversing last year's 9.48mn b/d drop. Slower than anticipated demand in the US and Canada in January-March combined with a steep rise in Covid-19 infection rates in India and Brazil have prompted a downwards revision in the estimate for the first half of this year, but that is offset by a slightly higher forecast for the second half. "Positive weekly transportation fuels data from the US, and the acceleration in vaccination programmes in many regions allows for optimism," Opec said.

By James Keates