Opec has left its key forecasts for this year unchanged based on its expectations of renewed economic growth, with the near-term outlook clouded by the Covid-19 pandemic.
"While a strong global economic recovery in 2021 remains very likely, the depth and magnitude of this year's rebound remains uncertain," Opec said in its latest Monthly Oil Market Report (MOMR). It kept its global economic growth forecast unchanged this year at 4.4pc from 2020, expecting the recovery to pick up towards the end of the second quarter as rapid-testing facilities and vaccines become more widely available.
But, the rise in Covid-19 infections and a slow start to vaccination programmes are tempering the recovery in the first quarter of the year, it said. China is the latest country to issue strict travel warnings as a result of new virus variants that have emerged in certain parts of the world.
"Further insights in the coming weeks will help create a better understanding of the global economy's near-term path, and the forecast will be thoroughly reviewed once more in the coming month," Opec said.
Saudi Arabia's oil minister Prince Abdulaziz bin Salman described his country's voluntary production cut of 1mn b/d for February and March as a pre-emptive move in case the market deteriorates. Opec secretary-general Mohammed Barkindo said yesterday that the move will help Opec to "navigate through this season of low demand in the first quarter."
Opec kept its global oil demand forecast for 2021 unchanged at 95.9mn b/d, a rise of 5.9mn b/d on the year. Its forecast for the call on Opec members' crude remains at 27.2mn b/d, up by around 5mn b/d from 2020. And it again forecasts non-Opec liquids production to grow by 850,000 b/d this year, to 63.53mn b/d.
Market conditions for US shale have improved into "a range where output is likely to recover at a higher-than-expected rate in the second half of 2021," Opec said, as it revised higher its US liquids supply forecast for 2021 by 70,000 b/d to 370,000 b/d. This is offset by a lower supply forecast for Russia.
Opec crude production averaged 25.36mn b/d in December, up by 278,000 b/d from November, according to an average of secondary sources including Argus.
Citing preliminary data, Opec said OECD commercial stocks stood at 3.1bn bl in November, down by 24.5mn b/d from the previous month and 205mn bl above the latest five-year average.
