Lagos — The Organisation for the Petroleum Exporting Countries, OPEC said its expectations for global economic growth in 2021 is now higher at 5.1%.
Remarks by OPEC Secretary-General, Sanusi Barkindo delivered at the 28th Meeting of the Joint Ministerial Monitoring Committee, JMMC on Wednesday via videoconference said the forecast is compared to 4.8% at its last meeting.
According to him, the positive expectation is driven by the additional US stimulus measures, as well as continued acceleration in the recovery in Asian economies, although he made reference to the recent temporary stalling of the rebound in India.
“However, we should not be out smelling the flowers just yet, and this forecast may be revisited. It is surrounded by uncertainties, including the prevalence of COVID-19 variants; the uneven rollout of vaccines; further lockdowns and third waves in several countries; and inflationary pressures and central bank responses.
“Moreover, we have also seen crude futures flip into a contango for the first time since mid-January, although they returned again to backwardation as markets digested the blockage of the Suez Canal”.
The group also slightly revised global oil demand in 2021 to stand at 5.6 mb/d.
“… and we need to keep in mind that demand contracted by a huge 9.6 mb/d in 2020.
“There is also a continuing divergence between the first and second half of 2021. The first half has again been adjusted lower, mainly due to extended measures and new lockdowns in many key parts of Europe. In contrast, oil demand prospects in the second half have remained relatively steady, reflecting expectations for a stronger economic recovery and positive impact of vaccination rollouts”.
On the supply side, non-OPEC liquids for 2021 were forecast to grow by almost 1 mb/d, compared to expectations of 0.7 mb/d at its last meeting.
However, the US liquids supply forecast remains unchanged, with a growth of 0.16 mb/d in 2021.
From the perspective of inventories, preliminary data for February 2021 shows a further drawdown of around 45 mb in OECD commercials, following a drop of around 14 mb in January. The February level is 95 mb higher than the same time one year ago, and 58 mb above the average for the period 2015-2019.
“February stock draw is attributed mainly to products, particularly in the US market, as product inventories moved sharply lower on the back of very low refinery runs as a result of severe winter weather.
“The realignment of inventories is also been driven by the excellent conformity to the production adjustments from DoC participants, and here we should again acknowledge the large and generous additional commitment of 1 mb/d for February, March, and April from the Kingdom of Saudi Arabia”.
The OPEC and non-OPEC Ministerial Meeting holds today as the group decides how to navigate the rest of the second quarter of 2021 and beyond.