OPEC sees oil demand soaring in 2021 but still below 2019

An Indian laborer pulls a cart laden with empty oil drums. OPEC and its allies led by Russia have cut output by 10 million bpd since May. (AFP)
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Updated 15 July 2020

OPEC sees oil demand soaring in 2021 but still below 2019

  • Forecast highlights massive stimulus measures to counter global pandemic

LONDON: Global oil demand will soar by a record 7 million barrels per day (bpd) in 2021 as the global economy recovers from the coronavirus crisis, but will remain below 2019 levels, OPEC said in its monthly report.
It was the first report in which OPEC assessed oil markets next year. It said the forecast assumed no further downside risks materialized in 2021 such as US-China trade tensions, high debt levels or a second wave of coronavirus infections.

“This assumes that COVID-19 is contained, especially in major economies, allowing for recovery in private household consumption and investment, supported by the massive stimulus measures undertaken to combat the pandemic,” OPEC said.

Oil prices collapsed this year after global demand fell by a third when governments imposed lockdowns to stop the spread of the virus.

OPEC said in 2020 oil demand would drop by 8.95 million bpd, slightly less than in last month’s report.

In 2021, it expects efficiency gains and remote working to cap demand growth, keeping demand below record 2019 levels.

OPEC expects to cover the lion’s share of the massive projected demand spike in 2021 with demand for its crude rising by 6 million bpd to reach 29.8 million bpd.

From May 2020, OPEC and allies led by Russia have been cutting output by nearly 10 million bpd, or a 10th of global demand, to help prop up oil prices.

Output in countries such as the US, Norway and Canada has also fallen, although they are not part of the OPEC+ agreement on output cuts.

OPEC said it expected non-OPEC oil supply in 2020 to fall by 3.26 million bpd and rise by just 0.92 million bpd in 2021.

OPEC said it saw no growth of output from the former Soviet Union in 2021 even though Russia, Kazakhstan and Azerbaijan have been curtailing output in tandem with OPEC.

“I think OPEC is betting that some of the wells that were shut in don’t come back due to reservoir damage in non-OPEC countries. But OPEC isn’t immune to declines either,” said Amrita Sen, co-founder of the think tank Energy Aspects.

She said that OPEC’s demand recovery predictions could prove optimistic. Energy Aspects see demand bouncing back by about 5 million bpd next year.

OPEC said it expected US output in 2021 to grow by just 0.24 million bpd after falling by 1.37 million bpd in 2020 and a rise of 1.7 million in 2019.

OPEC said it had cut supply in June by a further 1.89 million bpd to 22.27 million bpd, based on secondary sources the group uses to monitor its output. That amounts to more than 110 percent compliance with the pledges, according to a Reuters calculation, up from May’s estimate of 84 percent.

OPEC estimated demand for its crude this year at 23.8 million bpd, up 200,000 bpd from last month and over 1.5 million bpd more than it pumped in June, suggesting maintaining current output would lead to a 2020 supply deficit.

Despite the cuts, oil stocks in industrialized countries continued to rise in May by 29.9 million barrels to reach 3.167 billion, about 210 million barrels above a five-year average.


Oil workers evacuated as storm heads for US rigs

Updated 20 September 2020

Oil workers evacuated as storm heads for US rigs

  • Production faces renewed threat as Beta bears down on key Gulf of Mexico platforms

NEW YORK: Royal Dutch Shell halted some oil production and began evacuating workers from a US Gulf of Mexico platform, the company said, as a new tropical storm flared.

Beta, the 23rd-named storm of the Atlantic hurricane season, formed in the Bay of Campeche and was forecast to strengthen steadily and become a hurricane by Sunday off the Texas coast, the National Hurricane Center (NHC) said.

Shell said it was removing non-essential employees from its Perdido platform in the western Gulf of Mexico and securing nearby drilling rigs. Occidental Petroleum Corp, which operates in the same area, also began implementing storm procedures, it said.

Chevron Corp. has not newly evacuated staff and there was no impact from storm Beta on production at its operated facilities, the company said. Chevron owns a stake in Shell’s Perdido.

The NHC issued a hurricane watch for most of the Texas coast and warned of heavy rains along the northwest Gulf coast through Wednesday.

Beta could become the third Gulf of Mexico hurricane in less than a month, behind Laura and Sally. Hurricane Sally swept across the central and eastern Gulf, slamming into Alabama on Wednesday with winds of up to 105 mph (170 kph). Laura entered on Aug. 25 and hit southwest Louisiana with 150 mph winds.

There were 37 platforms on Friday that remained unstaffed, with oil output cut by 396,554 barrels per day and natural gas by 435 million cubic feet per day in the wake of Hurricane Sally.

The US Gulf of Mexico offshore oil production accounts for 17 percent of US crude oil production and 5 percent of US natural gas production.