Opec cuts world oil demand forecast

[LONDON] The Organization of the Petroleum Exporting Countries (Opec) on Thursday (Nov 11) cut its world oil demand forecast for the last quarter of 2021 as high energy prices curb the recovery from Covid-19, delaying the timeline for a return to pre-pandemic levels of oil use until later in 2022.

In a monthly report, Opec also raised its supply forecast from US shale producers next year, a potential headwind to the efforts of the group and its allies, known as Opec+, to balance the market.

Opec said it expects oil demand to average 99.49 million barrels per day (bpd) in the fourth quarter of 2021, down 330,000 bpd from last month's forecast. The year's demand growth forecast was trimmed by 160,000 bpd to 5.65 million bpd.

"A slowdown in the pace of recovery in the fourth quarter of 2021 is now assumed due to elevated energy prices," Opec said in the report. Opec also cited slower-than-expected demand in China and India for the downward revision.

Oil has risen to a 3-year high above US$86 a barrel this year as Opec+ only gradually ramps up supplies and demand rises, boosting pump prices to the highest in years in some markets.

Natural gas, power and coal prices have also soared.

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Governments, companies and traders are closely monitoring the speed with which demand recovers. A slower pace could ease upward pressure on prices and bolster the view that the impact of the pandemic will curb demand for good.

Opec now sees world consumption surpassing the 100 million bpd mark in the third quarter of 2022, 3 months later than forecast last month. On an annual basis according to Opec, the world last used over 100 million bpd of oil in 2019.

The producer group stuck to its forecast that demand will rise by 4.15 million bpd next year. This will take consumption to an average of 100.6 million bpd, above the 2019 level.

Oil was little changed just below US$83 a barrel after the report was released, up from an earlier decline.

REUTERS