Image credits: Mike McBey, Flickr
News Article

OPEC Revises Down Oil Demand Outlook

By Peter Appleby | Wed, 11/11/2020 - 18:36

The Organization of the Petroleum Producing Countries (OPEC) has reduced its 2021 oil demand after European nations reinforced lockdowns with COVID-19 cases spiking in October.

OPEC’s Monthly Oil Market Report forecasts that 2021’s demand will now be 96.26Mboe/d, a slight reduction from its October report that predicted levels to be 96.84Mboe/d. Demand from OPEC countries will account for 45.38Mboe/d, while non-OPEC nations, including Mexico, will account for the remaining 50.88Mboe/d, said the report.

The downward revision comes after European nations including the UK, France, Holland and Italy applied mobility restrictions once again, with some registering their highest rates of COVID-19 cases since the pandemic arrived. The OPEC Oil Basket Reference price demonstrates the incredible pressure the industry has faced during the last 12 months and the slight downturn October offered after some months of progress following April’s negative price. “The OPEC Reference Basket (ORB) fell by US$1.46 or 3.5 percent, month-on-month (m-o-m), to average US$40.08/b in October. Year-to-date (y-t-d), the ORB averaged US$40.57/b, US$23.34 lower than the same period last year,” said the report.

However, global oil demand and prices are not set to take the fall that they did earlier this year. While there is a slowdown in growth demand, it has not been anywhere near the levels seen at the start of the pandemic.

Today’s report comes after global hopes for a COVID-19 vaccine rose sharply following Pfizer/BioNTech’s s announcement that its vaccine candidate, being trialed in Oxford, UK, had exceeded expectations and was 90 percent effective. Should remaining health concerns of a vaccine in its early stages and the logistical challenges to deliver it to millions be overcome, demand will surely rise again.

Prices of Brent, WTI and the Mexican crude basket have risen sharply this week following Pfizer/BIoNTech’s vaccine announcement, overcoming a dip they endured at the end of October. In mid-October, PEMEX Director Octavio Romero forecast that PEMEX production would reach 1.94MMb/d by the end of 2020. As of Sept. 1, the last official figures available, PEMEX production sat at 1.525MMb/d.

Photo by:   Mike McBey, Flickr
Peter Appleby Peter Appleby Journalist and Industry Analyst