By Emmanuel Addeh in Abuja with agency report
The Organisation of Petroleum Exporting Countries (OPEC) has revised upwards its forecast for non-OPEC members’ oil supply this year, leading to a fall in the projected call on its own members’ crude oil.
The cartel also lowered its forecast for global oil demand this year in its latest Monthly Oil Market Report (MOMR) for July, notifying that demand to decrease by 9.1mn b/d to 90.6mn b/d this year is down by 100,000 b/d from last month’s projection.
The OPEC’s report also showed that Nigeria may have started meeting its quota as agreed by the organisation in April after initially defaulting, with production falling to approximately 1.5 million in May, 1.4 million in June and 1.4 million in July in apparent compliance with the production cut.
The downward revision reflects weaker-than-expected demand in the second quarter from some non-OPEC countries and a decline in global GDP in 2020 to 4pc, from 3.7pc last month, leading to lower oil demand expectations for the second half of the year.
Argus, an independent provider of price information, also reported that OPEC’s forecast for oil demand growth in 2021 is unchanged at 7mn b/d on the year, with consumption projected to reach 97.6mn b/d. The organisation assumed that the COVID-19 pandemic would be largely contained and that economic activity will increase by 4.7pc on the year.
OPEC has reduced the projected call on its own members’ crude oil to 23.4mn b/d in 2020, down by 400,000 b/d from the previous month and a fall of 5.9mn b/d from 2019. The call on OPEC crude oil in 2021 has also been revised down by 500,000 b/d from the previous month to stand at 29.3mn b/d.
The reduction in the projected call on OPEC crude oil in 2020 follows a rise in the forecast for non-OPEC members supply to 62.11mn b/d in 2020, down by 3.03mn b/d on the year. Its previous projection was for a 3.26mn b/d decline.
But OPEC expects non-OPEC members crude oil supply to rise in the third quarter, starting from this month.
It sees production growth this year from Norway, Brazil, Guyana and Australia and declines mainly from the United States, Russia, Canada, Kazakhstan, Malaysia, Colombia and Azerbaijan.
It expects a smaller decline in US production at 1.32mn b/d in 2020 on the year, up by 46,000 b/d from its previous projection as it anticipated higher production in the second half of the year.
The cartel has increased its non-OPEC members supply forecast for 2021 by 66,000 b/d to 63.10mn b/d, up by 980,000 b/d on the year, mainly as a result of better-than-expected recovery in Canada’s production.
“Nevertheless, uncertainty surrounding financial and logistical constraints for US production, as well as a potential second wave of COVID-19 infections globally, remains a concern,” the cartel’s report said.
