By David Hodari 

Some of the world's wealthiest nations are grappling with stubborn coronavirus rates, but a brightening outlook and historic stimulus packages will boost economic activity and oil demand this year, the Organization of the Petroleum Exporting Countries said Tuesday.

In its closely-watched monthly market report, OPEC increased its 2021 global oil demand forecast by 100,000 barrels a day and raised its forecast for global economic growth by 0.3 percentage points to 5.4%.

The cartel said its increased demand forecast was prompted by forecasts of a better-than-expected second half of the year, thanks to "stimulus programs and a further easing of Covid-19 lockdown measures, amid an acceleration in the vaccination rollout," largely in the club of wealthy nations known as the Organization for Economic Cooperation and Development. Chinese demand has also remained resilient in recent months, OPEC said.

Oil prices rose Tuesday, with Brent crude oil -- the global benchmark -- up 1.1% at $63.96 a barrel and West Texas Intermediate futures, the U.S. benchmark, climbing 1% to $60.27 a barrel. Upbeat Chinese economic data gave oil a boost early Tuesday, according to Helge André Martinsen, senior oil market analyst at DNB Markets.

OPEC and its allies agreed earlier this month to boost their collective output by more than two million barrels a day over the coming months, betting on resurgent demand as they and the rest of the world assess the economic consequences of the pandemic's trajectory.

That decision came despite a faltering oil price rally, which has stalled in recent weeks as some of Europe's largest economies reimposed tight coronavirus restrictions and as organizations such as the International Energy Agency dismissed the idea that oil was entering a "supercycle" of low supply and climbing demand, pointing to glutted global oil inventories. OPEC said it has reduced its oil demand forecast for the first half of the year.

While OECD stocks fell by 45 million barrels in February, they remained some 57 million barrels above their average level for the five-year period between 2015 and 2019, OPEC said.

During March, OPEC more or less maintained the supply discipline that has allowed it to regain control of oil prices since they crashed last spring amid a price war and the most seismic effects of the pandemic on demand. According to secondary sources OPEC cited, Saudi supply slipped by 33,000 barrels a day last month, although the kingdom will start to unwind its unilateral million-barrel cut in the coming months.

Meanwhile, Iran -- which is exempted from the cuts of the OPEC+ alliance -- increased its output by 137,000 barrels a day in March in what may be a signal to oil-market watchers of things to come. China has been importing more Iranian oil in recent months, with Tehran circumventing U.S. sanctions.

Investors have been closely monitoring indirect talks between Iran and the U.S. as the two sides explore reviving the 2015 nuclear deal that could see Washington lift those sanctions that currently prevent Tehran from exporting oil at will.

Elsewhere, the cartel slightly reduced its forecast for 2021 supply growth from outside of OPEC, inching down its forecast by 30,000 barrels a day.

Write to David Hodari at David.Hodari@dowjones.com

 

(END) Dow Jones Newswires

April 13, 2021 08:14 ET (12:14 GMT)

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