The Organization of Petroleum Exporting countries (OPEC) on Thursday maintained forecasts for a strong recovery in global oil demand in 2021 and further growth next year, despite concerns about the spread of the Delta variant, which has weighed on oil prices.
In a monthly report, OPEC also raised its supply forecasts for competitors, including US shale oil producers, next year, which could be a potential resistance to efforts by the group and its allies to balance the market.
"the global economy continues to recover," the OPEC monthly report said. However, many challenges remain and it is easy to curb this momentum. In particular, developments related to the COVID-19 epidemic will need to be closely monitored.
Demand is expected to increase by 5.95 million b / d this year, or 6.6 per cent, the same as last month's forecast, OPEC said in a report. Fuel use will increase by 3.28 million barrels per day in 2022, which is also the same as last month's forecast, the report said.
Oil prices traded above $71 a barrel after the report was released. Oil prices have risen to pre-pandemic highs above $77 this year, boosted by hopes of economic recovery and production cuts in the OPEC+ alliance of OPEC and its allies, despite pressure from fears of a variant of Delta.
The OPEC raised its forecast for world economic growth in 2021 to 5.6 per cent from 5.5 per cent, provided the impact of the outbreak would be brought under control, but warned of "significant uncertainty". OPEC raised its growth forecast for 2022 by the same amount to 4.2 per cent.
"the evolution path of the COVID-19 epidemic will be the primary factor affecting the rate of recovery in the near future, and the emergence of potential variants and / or mutations pose a particular risk," OPEC said.
Shale oil production is expected to rebound
The report shows that OPEC production will increase and forecasts an increase in supply from competitors, including US shale oil producers, in 2022.
OPEC production increased by 640000 b / d in July to 26.66 million b / d, according to the report, as Saudi Arabia completely ended its previous voluntary production cuts to support the market.
The report predicts that oil supply from OPEC competitors will increase by 2.9 million b / d in 2022, compared with an increase of 840000 b / d last month, partly due to OPEC+ 's decision to increase production and higher oil prices to stimulate investment.
OPEC expects US shale oil production to increase by 560000 b / d in 2022 after shrinking this year, 60, 000 b / d higher than last month's forecast.
"US oil companies have been severely limiting production between 2020 and 2021," OPEC said. "nevertheless, the number of active rigs continues to increase, the number of hydraulic fracturing wells increases and the deployment of fracturing wells increases as companies once again have ample free cash flow."
Increased supply from competitors will limit demand for OPEC crude next year. It estimates that global demand for oil from its member countries is expected to be 27.6 million b / d, 1.1 million b / d lower than last month's forecast, but in theory there is still room for OPEC to increase production.