OPEC stuck to its prediction of a strong recovery in world oil demand in 2021 as growth in China and the United States counters the coronavirus crisis in India, an outlook that bolsters the group’s plan to gradually ease output cuts.
The Organization of the Petroleum Exporting Countries expected demand to rise by 5.95 million barrels per day (bpd) this year, or 6.6%, its forecast unchanged from last month.
The oil organisation on Tuesday, however, cut its demand forecast for the second quarter by 300,000 bpd.
“India is currently facing severe COVID-19-related challenges and will therefore face a negative impact on its recovery in the second quarter, but it is expected to continue improving its momentum again in the second half of 2021,” OPEC said in its monthly report.
Oil was trading close to $68 a barrel before the report was released. Prices have risen to pre-pandemic highs above $71 this year, boosted by hopes of economic recovery and OPEC+ cuts, although concern about Indian demand has weighed.
OPEC in the report raised its forecast of 2021 world economic growth to 5.5% from 5.4% seen earlier, assuming the impact of the pandemic will have been “largely contained” by the beginning of the second half of the year.
OPEC and its allies, known as OPEC+, agreed in April to gradually ease oil output cuts from May, after the new U.S. administration called on Saudi Arabia to keep energy affordable for consumers.
The report also showed slightly higher OPEC oil output already as Iran, exempt from making voluntary cuts due to U.S. sanctions, pumped more in April, driving a 30,000 bpd rise in the group’s output to 25.08 million bpd.
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