Oil Demand Outlook Drops on ‘Worsening Progression’ of COVID-19
Oil Demand Outlook Drops on ‘Worsening Progression’ of COVID-19
Global oil demand is expected to decrease for the rest of the year due to the “worsening progression” of the COVID-19 pandemic as July saw a reversed demand following a month-over-month increase in June on increased mobility in North America and Europe, the International Energy Agency said Thursday.
Oil demand is expected to increase 5.3 million barrels per day to 96.2 million barrels per day in 2021 and by additional 3.2 million barrels per day next year, according to the IEA’s monthly report for August.
These were revised from the previous estimate in July of 5.4 million barrels per day in 2021 and 3 million barrels per day in 2022.
Oil supply worldwide is projected to climb over the following months after the Organization of the Petroleum Exporting Countries and its allies in July agreed to boost the production by 400,000 barrels per day starting from August until the phasing out of the 5.8-million-per-day cut by the end of September 2022.
Non-OPEC countries are expected to raise output by 600,000 barrels per day in 2021 and 1.7 million barrels per day in 2022, of which the US will account for 60% of the growth, the IEA said, versus the previous outlook of 770,000 barrels per day and 1.6 million barrels per day, respectively.
“The immediate boost from OPEC+ is colliding with slower demand growth and higher output from outside the alliance, stamping out lingering suggestions of a near-term supply crunch or super cycle,” the IEA said Thursday.
West Texas Intermediate crude futures fell 0.1% to $69.17 a barrel, and Brent slid 0.08% to $71.39 a barrel on Thursday. Global refinery runs are estimated to increase annually by 3.7 million barrels per day to 77.9 million barrels per day this year, but still short of 3.7 million barrels per day from 2019, the IEA said.
Global oil supply increased month-on-month by 1.24% to an average of 95.69 million barrels pe day in July, according to the Organization of Petroleum Exporting Countries (OPEC) Monthly Oil Market Report on Thursday.
OPEC crude oil production in July increased from June by about 640,000 b/d to 26.66 million b/d, available secondary sources reported. Crude oil output increased mainly in Saudi Arabia, Iraq and Nigeria, while production decreased primarily in Angola and Venezuela.
Production in Saudi Arabia increased by 497,000 b/d to 9.4 million b/d in July while output in Iraq and Nigeria rose by 56,000 b/d and 45,000 b/d, respectively. Angola produced 38,000 b/d less in July compared to the previous month to total 1.07 million b/d. The share of OPEC crude oil in total global production increased to 27.9% in July.
World oil demand growth expectations for 2021 remained unchanged from the previous month’s assessment.
“Oil demand is still estimated to increase by around 6 million b/d to average 96.6 million b/d,” OPEC said. For next year, world oil demand is still projected to increase by 3.3 million b/d year on year, unchanged from last month’s assessment,” the cartel said.
Total world oil demand is projected to surpass the threshold of 100 million b/d in the second half of 2022 and reach 99.9 million b/d on average for the whole of 2022, it said.
“Demand for OPEC crude in 2021 was revised down by 0.2 million b/d from the previous month assessment to stand at 27.4 million b/d.” For next year, demand for OPEC crude was revised down by 1.1 million b/d from the previous month’s assessment to stand at 27.6 million b/d.
