OPEC projects gradual crude oil recovery in H2 2021

A joint committee of ministers from OPEC and non-OPEC countries have projected an increase in global crude oil demand by second half (H2) 2021.

The ministers gave the prediction during the 16th OPEC and non-OPEC ministerial meeting of the declaration of cooperation (DoC) which held virtually, on Tuesday.

The meeting was headed by its chairman, Abdul Aziz bin Salman, Saudi Arabia’s minister of energy, and co-chaired by Alexander Novak, deputy prime minister of Russia.

In a statement, OPEC+ said the ministering meeting emphasized the ongoing positive contributions of the declaration of cooperation in supporting a rebalancing of the global oil market.

On Monday, Brent crude, the global crude oil benchmark, went down by $0.49 to $65.62 per barrel.

The US West Texas Intermediate crude also lost $0.26, dropping to $61.88 per barrel.

OPEC+ noted that despite the difficulty posed by falling crude oil prices and the increase in COVID-19 cases in India, demand is expected to rise in the second half of the year.

“The Meeting highlighted the continuing recovery in the global economy, supported by unprecedented levels of monetary and fiscal support, while noting that the recovery is expected to pick up speed in the second half of the year,” the statement read.

“The Ministerial Meeting emphasized, however, that COVID-19 cases are rising in a number of countries, despite the ongoing vaccination campaigns, and that the resurgence could hamper the economic and oil demand recovery.”

The coalition agreed to continue implementation of the production adjustment decision of two million barrels a day supply over the next three months.

It noted that DoC participating countries pledged to achieve full conformity to the production adjustments and make up for previous adjustment shortfalls during the extended compensation period, which runs through the end of September 2021, and stressed the importance of accelerating the market rebalancing efforts without delay.

“The Meeting noted, with gratitude, the significant additional voluntary supply adjustment of 1 mb/d made by Saudi Arabia in April 2021 and a gradual return of these volumes in May, June and July 2021, given the prevailing uncertainties surrounding the pace of the oil demand recovery,” it added.

“The Meeting observed the destocking trend of commercial OECD inventories, but noted that they increased by 14.4 mb in March 2021 and were 77.4 mb above the 2015-2019 average.”

Mohammad Barkindo, secretary-general of OPEC, was quoted on Twitter as saying the organisation’s leadership has helped in ensuring growth in oil demand.

He added that the rising COVID-19 cases in some oil producing countries requires more steadfastness from OPEC stakeholders.

He tweeted: “We can take comfort in knowing that our leadership has helped turn the tide.

“But at the same time, the persistence of Covid-19 reminds us that this is no time to stray from the cautious and steadfast approach we have taken over the past year.”

#HEBarkindo added: “We can take comfort in knowing that our leadership has helped turn the tide. But at the same time, the persistence of #COVID19 reminds us that this no time to stray from the cautious and steadfast approach we have taken over the past year.”

— OPEC (@OPECSecretariat) April 27, 2021

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