On its monthly report, the Organization of Petroleum Exporting Countries (OPEC) raised its global crude oil demand forecast for this year, and for the first time, the organization assessed oil markets for 2021.
For 2020, oil demand would likely fall by 8.95 million bpd, adjusted up from the previous estimate in June. For OPEC crude, demand this year is projected to be at 23.8 million bpd, up by 200,000 bpd from the prediction last month. It would be 1.5 million bpd higher than its output in June. The estimate signaled that supply deficit might happen this year if the current output cut is maintained.
Meanwhile, for next year, OPEC estimated that demand growth would be capped by the efficiency gains and remote working that it would be below the record level hit in 2019. The group expected the demand for its own oil output to rise by 6 million bpd to 29.8 million bpd, covering a significant portion of the demand spike next year.
The optimistic forecasts, however, were based on assumptions that the coronavirus pandemic is contained, mostly in the world’s top economies. The recovery in private household consumption and investment could be supported by the massive stimulus measures undertaken to combat the pandemic.
Another assumption is that there would be no downside risks occurring next year, including the US-China trade tensions and high debt levels.
Regarding output, OPEC estimated that the global count would fall this year. Non-OPEC oil supply is likely to drop by 3.26 million bpd, and in 2021 to rise by merely 0.92 million bpd in 2020.
Next year, US output is probably growing by just 0.24 million bpd following this year’s fall of 1.37 million bpd. The group estimated that there would be no output growth from the former Soviet Union in 2021, albeit Russia, Kazakhstan, and Azerbaijan have been slimming down their outputs along with OPEC.
