Despite uncertainties, OPEC sticks to forecasts of increased demand for oil in the second half of the year, Energy News, ET EnergyWorld

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LONDON: OPEC stuck to its prediction of a strong recovery in global oil demand in 2021 led by US and China despite pandemic uncertainties, indicating need for more oil of the producer group.

In a monthly report released Thursday, the Organization of the Petroleum Exporting Countries said demand will increase 6.6% or 5.95 million barrels per day (bpd) this year. Forecasts remained unchanged for a second consecutive month.

The report’s predictions come despite a slower-than-expected recovery in the first half of this year and as it warns of “significant uncertainties” such as the potential emergence of new variants of the coronavirus.

“The global economic recovery has been delayed due to the resurgence of COVID-19 infections and renewed lockdowns in key economies including the euro zone, Japan and India,” OPEC said in its report monthly.

“Overall, the recovery in global economic growth, and therefore in demand for oil, is expected to accelerate in the second half of the year,” he said.

Although the United States is expected to make the largest contribution to demand growth in 2021, OPEC has said demand in industrialized OECD countries will not fully recover from the 2020 collapse.

Oil topped $ 72 a barrel after the report was released. The price has gained 39% this year due to increased demand and reductions in supply from OPEC and its allies, known as OPEC +.

OPEC predicts global economic growth of 5.5% in 2021, unchanged from last month, assuming the impact of the pandemic will have been “largely contained” by the start of the second half of the year.

“Ongoing vaccination efforts, the growing share of recovered cases leading to an increase in herd immunity and the easing of lockdown restrictions give hope that the pandemic could be contained within the next few months,” said declared OPEC.

TOWARDS BALANCE

OPEC + agreed in April to gradually ease oil production cuts from May to July and confirmed the decision at a meeting on June 1. Most of its production cuts will remain after July.

OPEC + ‘s efforts have “significantly paved the way for a rebalancing of the market,” OPEC said.

The report showed higher OPEC oil production, reflecting the decision to pump more and the gains of Iran, exempted from making voluntary cuts due to US sanctions. Production in May rose 390,000 bpd to 25.46 million bpd, OPEC said.

Saudi Arabia told OPEC it increased May output from 410,000 bpd to 8.54 million bpd, higher than the figure given on June 1 by Saudi energy minister .

Also in the report, OPEC kept its estimate of how much oil it needs to pump this year at 27.7 million barrels per day, even after a small upward revision in non-OPEC supply.

In theory, this helps unwind more of the OPEC + cuts in the second half of the year.

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