OPEC Sees Oil Demand Boosted by Stimulus and Vaccine Programs
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
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
The cartel said its increased demand forecast was prompted by
forecasts for a better-than-previously-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 edged higher Tuesday, with Brent crude oil -- the
global benchmark -- up 0.6% at $63.67 a barrel and West Texas
Intermediate futures, the U.S. benchmark, climbing 0.8% to $60.18 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
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 15:47 ET (19:47 GMT)
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