OPEC says high prices to dampen pace of oil demand recovery By Reuters
© Reuters. FILE PHOTO: A 3D-printed oil pump jack is seen in entrance of displayed OPEC brand on this illustration image, April 14, 2020. REUTERS/Dado Ruvic/File Picture
By Alex Lawler
LONDON (Reuters) – OPEC on Thursday minimize its world oil demand forecast for the final quarter of 2021 as excessive vitality costs curb the restoration from COVID-19, delaying the timeline for a return to pre-pandemic ranges of oil use till later in 2022.
The Group of the Petroleum Exporting International locations in a month-to-month report additionally raised its provide forecast from U.S. shale producers subsequent yr, a possible headwind to the efforts of the group and its allies, generally known as OPEC+, to steadiness the market.
OPEC stated it expects oil demand to common 99.49 million barrels per day (bpd) within the fourth quarter of 2021, down 330,000 bpd from final month’s forecast. The yr’s demand progress forecast was trimmed by 160,000 bpd to five.65 million bpd.
“A slowdown within the tempo of restoration within the fourth quarter of 2021 is now assumed as a consequence of elevated vitality costs,” OPEC stated within the report. OPEC additionally cited slower-than-expected demand in China and India for the downward revision.
Oil has risen to a three-year excessive above $86 a barrel this yr as OPEC+ solely step by step ramps up provides and demand rises, boosting pump costs to the best in years in some markets. , energy and coal costs have additionally soared.
Governments, firms and merchants are intently monitoring the pace with which demand recovers. A slower tempo might ease upward strain on costs and bolster the view that the influence of the pandemic will curb demand for good.
OPEC now sees world consumption surpassing the 100 million bpd mark within the third quarter of 2022, three months later than forecast final month. On an annual foundation based on OPEC, the world final used over 100 million bpd of oil in 2019.
The producer group caught to its forecast that demand will rise by 4.15 million bpd subsequent yr. This may take consumption to a mean of 100.6 million bpd, above the 2019 stage.
Oil was little modified slightly below $83 a barrel after the report was launched, up from an earlier decline.
SHALE REBOUND SEEN
The report additionally confirmed greater output from OPEC and forecast extra provides from U.S. shale producers in 2022.
OPEC+ is step by step unwinding document output cuts put in place final yr. In July, the group agreed to step by step enhance output by 400,000 bpd a month from August.
The report confirmed OPEC output rose in October by 220,000 bpd to 27.45 million bpd with high producer Saudi Arabia offering half the rise. 4 of the 13 OPEC members pumped much less as a consequence of a scarcity of capability.
OPEC sees output of U.S. tight oil, one other time period for shale, rising by 610,000 bpd in 2022, up 200,000 bpd from final month’s forecast, after a contraction this yr, as greater costs immediate extra funding.
Nonetheless, OPEC left its progress forecast for 2022 non-OPEC total provide regular as a consequence of downward revisons in different producers.
With decrease demand now seen, OPEC expects the world to want 28.7 million bpd from its members in 2022, down 100,000 bpd from final month however nonetheless permitting for greater OPEC manufacturing.