OPEC+ Committee Lowers its Global Oil Demand Growth Forecasts

A report issued from an OPEC + expert team committee reviewed by Reuters revealed that the cartel has lowered its forecast for global oil demand growth in 2021 by 300,000 barrels per day, indicating concerns about the market’s recovery in light of a new wave of lockdown measures to combat the Coronavirus.

The joint technical committee met on Tuesday ahead of a ministerial meeting on Thursday to decide on the production policy. The committee advises the organization of the petroleum exporting countries (OPEC), which includes Saudi Arabia and Russia.

“Despite the continued draw of OECD commercial stocks, they are still above the 2015-2019 average, recognizing that the prevailing fluctuations in the market structure are an indication of fragile market conditions,” the committee said in the report.

Under a basic scenario, the committee now expects oil demand to grow by 5.6 million barrels per day this year, down 300,000 barrels per day from its previous forecast. It also raised its forecast for global supply growth by 200,000 barrels per day to 1.6 million barrels per day.

As a result, it now expects oil stocks in industrialized countries to drop below the 2015-2019 average in August, which is a month away from what it had previously expected.

OPEC and allied producers (OPEC +) are currently cutting production by just over seven million barrels per day in an effort to support prices and reduce excess supplies. Saudi Arabia is increasing production cuts by one million barrels per day.

A source told Reuters on Monday that Saudi Arabia was ready to support an extension of oil cuts and also to extend its voluntary cuts.