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The rebound in global oil
demand is set to accelerate in
the second half of 2021 as the
world continues to burn
through the supply glut it accrued last year, the Organization of the Petroleum Exporting Countries said on
Thursday.
In its monthly market report, OPEC highlighted data
showing that the crude inventories of the world’s developed
countries had slipped to
around 34 million barrels
above the average level for
2015-19.
The Vienna-based organization’s technical committee has
said in recent weeks that it expects the world’s crude stocks
to fall below the five-year average in the second half of the
year. OPEC’s report on Thursday confirmed its expectations
that Covid-19 vaccination rollouts, stimulus measures and
pent-up demand will add momentum to a resurgence in oil
demand.
That outlook recently
prompted the cartel to continue relaxing curbs on oil
production put in place last
year when the world was close
to running out of places to
store excess crude when pandemic restrictions hammered
demand.
Rising consumption of
transportation fuels like gasoline mean oil demand will increase to 99 million barrels a
day in the second half of 2021,
a 5% increase on its level in
the first six months of the
year, OPEC said. Demand in
the fourth quarter is expected
to be 99.82 million barrels a
day, just 150,000 barrels below
2019’s pre-pandemic average.
Oil prices edged higher on
Thursday, with Brent crude,
the global benchmark, adding
0.4% to $72.52 a barrel. West
Texas Intermediate futures,
the U.S. gauge, closed up 0.5%
at $70.29 a barrel. Both benchmarks have repeatedly broken
multiyear highs in recent
weeks, with the world’s dwindling supply glut and rising
demand.
In its report, OPEC left unchanged its forecast that
global oil demand will rebound
by six million barrels a day in2021 and held its estimate that
global economic growth will
rise 5.5% this year.
But the cartel did change
its expectations for supply
growth from its non-OPEC
counterparts, increasing its
forecast by 100,000 barrels a
day to 800,000 barrels a day.
Driving that increase is a
faster-than-expected recovery
in U.S. production, with output
also rising in other non-cartel
producers like Norway, China
and Indonesia.
With crude consumption
continuing to rise toward the
middle of the year, “investment is anticipated to rise,
with the stabilization of crude
oil markets expected to add
further upside in some producer countries, including the
U.S.,” the report said.
Aside from the forecast uptick in U.S. production, investors have in recent weeks
highlighted new coronavirus
variants and the potential end
to sanctions on Iranian oil
supply as threats to the oil
market’s recent resurgence.
Iranian oil supply rose
again in May, climbing 42,000
barrels a day to just under 2.5
million barrels a day, according to secondary data cited by
OPEC.
Analysts expect Iran to be
able to add as much as 1.5 million extra barrels a day to
global markets if talks between Tehran and world powers successfully revive a nuclear deal that would allow
Iran to pump at will.