OPEC said a recovery in oil demand will be focused on the second half of the year as the impact of the pandemic lingers as a headwind for the group and its allies in supporting the market.
In a monthly report, the Organization of the Petroleum Exporting Countries said demand will rise by 5.89 million barrels per day (bpd) in 2021, or 6.5%, up slightly from last month. But the group cut its forecasts for the first half.
“Total oil demand is foreseen to reach 96.3 million bpd with most consumption appearing in the second half,” OPEC said in the report.
“This year’s demand growth will not be able to compensate for the major shortfall from 2020 as mobility is forecast to remain impaired throughout 2021.”
The latest forecasts could bolster cautious views among OPEC and its allies, known as OPEC+, on how quickly to unwind more of last year’s record oil output cuts. OPEC+ last week decided to mostly extend current curbs into April.
Oil held onto most of an earlier gain after the report was released, trading close to $69 a barrel. Prices have risen to pre-pandemic highs this month, boosted by hopes of economic recovery and OPEC+ supply restraint.
OPEC raised its forecast of world economic growth this year to 5.1% from 4.8% as activity accelerates by the end of the first half. Still, it sees the mobility restrictions continuing to dampen oil demand, despite faster growth.
“Oil-intensive sectors, especially travel and transportation, will remain disproportionately affected, with a larger negative impact on 2020 oil demand and a lower positive contribution to 2021 oil demand, relative to global economic growth,” OPEC said.