OPEC on Tuesday raised its forecast for growth in world oil demand this year on hopes 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 percent, the Organization of the Petroleum Exporting Countries forecast in its monthly report, up 70,000 bpd from last month.
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However, OPEC lowered its forecast for the second quarter.
“As the spread and intensity of the COVID-19 pandemic are expected to subside with the ongoing rollout of vaccination programs, social distancing requirements and travel limitations are likely to be scaled back, offering increased mobility,” OPEC said in the report.
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The upward revision marks a change of tone from previous months, in which OPEC has lowered demand forecasts due to 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 was trading close to $64 a barrel before the report was released on Tuesday. Prices have risen to pre-pandemic highs above $70 this year, boosted by hopes of economic recovery and OPEC+ supply restraint.
OPEC raised its forecast of 2021 world economic growth to 5.4 percent from 5.1 percent, assuming the impact of the pandemic is “largely contained” by the beginning of the second half of the year.
OPEC+ agreed on April 1 to gradually ease oil output cuts from May, after the new US administration called on Saudi Arabia to keep energy affordable for consumers.
The report also showed higher OPEC oil output already as Iran, exempt from making voluntary cuts due to US sanctions, pumped more in March, driving a 200,000 bpd rise in the group’s output to 25.04 million bpd.
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