OPEC predicted stronger demand for its crude on a combination of rising global fuel consumption and output disruptions elsewhere.
The latest data from the group indicate that the world will continue to face an oil supply deficit in the coming months even as its members revive idle production. Despite the threat of the Delta variant of COVID-19, fuel consumption is recovering while crude production from the North Sea to the U.S. and Mexico comes in lower than anticipated.
“The global economic recovery, in combination with a considerable rebound in mobility, significantly lifted oil demand growth in the first half,” according to a monthly report from the Organization of Petroleum Exporting Countries’ Vienna-based secretariat published on Monday. “While this dynamic is forecast to soften towards the end of 2021,” the overall trend is positive.
The world’s appetite for OPEC crude was revised up by 260,000 bbls/d for this year, compared with last month’s estimate, largely due to supply disruptions outside the group. North American output was curbed by Hurricane Ida and a fire at an offshore platform in Mexico, according to the report. North Sea production has also been lower than expected this quarter.
The demand for OPEC crude was revised higher by 1.12 million bbls/d for 2022. Global consumption is expected to increase by 4.2 million bbls/d next year to 100.8 million bbls/d, 980,000 bbls/d higher than last month’s estimate and exceeding pre-pandemic levels.
OPEC’s production rose by 151,000 bbls/d to 26.76 million bbls/d in August — still significantly below the average global demand for OPEC crude in the third quarter. That leaves plenty of space for the organization and its allies to gradually revive 400,000 bbls/d of idle production each month, in line with the July OPEC+ agreement.
Still, the cartel’s data showed that it isn’t just non-OPEC nations experiencing production problems. Despite being permitted to increase production in August, several African members showed little growth, or in the case of Nigeria saw a 114,000 bbl/d drop in production.
© 2021 Bloomberg L.P.