The Organization of the Petroleum Exporting Countries on Wednesday said global oil demand would recover slowly into 2021 due to the resurging number of COVID-19 infections, denting the group’s efforts to support the market. OPEC forecast worldwide oil consumption to increase by 6.25 million bpd in 2021 to 96.26 million bpd. The latest growth projection is 300,000 bpd lower than OPEC’s last month outlook.
The slowdown in demand recovery could give OPEC and its allies an incentive to delay a planned production boost in January. On Wednesday, Algeria even said that the group could even cut output further if necessary. OPEC noted that reimposed lockdowns in some European countries would hit fuel demand for the rest of 2020. The cartel also expects that the pandemic fallout will linger in the oil market until the middle of 2021.
OPEC+ advisory panel will meet next week to discuss the alliance’s future steps. The encouraging results of the initial test of COVID-19 treatment developed by drugmakers Pfizer and BioNTech boosted oil prices to a two-month high of above $45/barrel on Wednesday. An effective and widely available vaccine will support the economy and oil market in the first half of 2021, OPEC said.
OPEC also reported a rising output of 320,000 bpd to 24.39 million bpd in October as Libyan oil production returned after months-long blockades. OPEC forecast demand for its crude to be 600,000 bpd less than expected in 2021 at 27.4 million bpd. Despite the weaker outlook, this will leave a room for OPEC producers to pump more oil next year.
