Opec slashes 2021 oil demand outlook over concerns about Covid-19 impact

Global demand for 2021 is estimated to increase by 5.9 million bpd due to slowdown in the transportation sector

Opec+ deferred the increase at their annual meeting last month, taking into account lockdowns imposed across a number of developed nations. AP

Opec revised down its oil demand forecast for 2021 by 350,000 barrels per day but left its assessment for the current year relatively unchanged, as it factored in uncertainty over the impact of Covid-19 on transportation fuels.

Global demand for 2021 is estimated to increase by 5.9 million bpd, largely due to the possible slowdown in demand for fuel in the first half of the year in OECD economies.

The outlook for the current year is 9.77m bpd, which is only marginally lower than its earlier estimate pegged at 9.8m bpd.

For the current year, the exporters' group estimates OECD oil demand to drop by 5.48m bpd, with much of the decline attributed to the Americas. Non-OECD demand is set to fall by 4.29m bpd but China, which has seen growth since the beginning of the third quarter, is expected to continue this trend in the last quarter of 2020.

Overall demand for the year is expected to reach 89.99m bpd, Opec said, while the forecast for 2021 is estimated to be marginally higher at 96.89m bpd. The outlook falls significantly short of the nearly 100m bpd average seen in 2019.

Opec+, the alliance between Opec and non-member producers, will begin gradually increasing production by 500,000 bpd in January. The group cut back a record 9.7m bpd earlier this year to reverse collapses in demand and prices due to the pandemic.

The alliance will cut 7.2m bpd for three months until March, with a monthly monitoring committee convening to oversee compliance. Opec+ is set to meet on January 3 and 4 to discuss current levels of adherence to the output restriction pact.

Brent, the international marker was up 0.88 per cent, trading at $50.41 per barrel at 6.21pm UAE time. West Texas Intermediate, the US gauge, was up 1.05 per cent at $47.06 per barrel.