OPEC raised its forecast for growth in world oil demand this year on expectations the pandemic will subside, providing help for the group and its allies in their efforts to support the market.
Demand will rise by 5.95 million barrels per day (bpd) in 2021, or 6.6%, the Organization of the Petroleum Exporting Countries forecast in its monthly report. That is up 70,000 bpd from last month.
“As the spread and intensity of the COVID-19 pandemic are expected to subside with the ongoing rollout of vaccination programmes, social distancing requirements and travel limitations are likely to be scaled back, offering increased mobility,” OPEC said in the report.
The upward revision marks a change of tone from previous months, in which OPEC has lowered demand forecasts because of continued lockdowns. A further recovery could bolster the case for OPEC and its allies, known as OPEC+, to unwind more of last year’s record oil output cuts.
Oil gained further towards $64 a barrel after the report was released on Tuesday. Prices have risen to pre-pandemic highs above $70 this year, boosted by anticipation of economic recovery and OPEC+ supply restraint.
OPEC made a small upward revision in its 2021 demand projection last month, but it has steadily lowered the forecast from 7 million bpd expected in July 2020.
The group raised its forecast of 2021 world economic growth to 5.4% from 5.1%, assuming the impact of the pandemic is “largely contained” by the beginning of the second half of the year.
“The global economic recovery continues, significantly supported by unprecedented monetary and fiscal stimulus,” OPEC said. “The recovery is very much leaning towards the second half of 2021.”