The Organization of Petroleum Exporting Countries (OPEC) has revised down its 2021 global economic growth projections to 4.4 from 4.5 per cent forecast in October 2020, OPEC’s Secretary General Mohammed Barkindo has said, citing fears of new lockdowns, second and third waves of COVID-19 and high levels of unemployment, as raising new global anxieties.
“For 2021, we have slightly revised down growth to 4.4 per cent from the 4.5 per cent we envisaged last month.
“It remains a mixed economic picture. China is a bright spot, with positive growth of 2% in 2020 and other countries in Asia are also exhibiting some positive sign”, Barkindo told the 24th Meeting of the Joint Ministerial Monitoring Committee (JMMC ) via videoconference on Tuesday.
He noted that the large fiscal stimulus packages remained supportive, and vaccines offer hope, but the benefits of the latter will take time to trickle through to the real economy, and trigger growth in oil demand.
“The 2020 outlook for oil demand has been revised lower this month to a negative -9.8 million barrels a day (mb/d), a drop of 0.3 mb/d from our October meeting”, he emphasized, saying, ” This stands against growth of 1.2 mb/d that was expected in January 2020, a drop of a staggering 11 mb/d.
Similarly, Barkindo said: “Additionally, this month we have revised down expected growth for 2021 to 6.2 mb/d, compared to 6.5 mb/d previously”, while attributing the recent revisions to the slow pace of the economic recovery and recent COVID-19 containment measures, which are assumed to impact transportation and industrial fuel demand well into 2021.
The OPEC scribe said that for the oil market, the past month had offered both positives and negatives, given the impending 180th Meeting of the OPEC Conference on Nov. 30 and the 12th OPEC and non-OPEC Ministerial Meeting on Dec. 1
Therefore, “it is vital that we appraise all the data and analysis, look at how details and numbers have changed since the start of the year and review what has been achieved by the DoC to date,” he added
He said that the global economic growth forecast remained at a negative -4.3 per cent in 2020, which stands in stark contrast to the positive 3.1 per cent envisaged at the start of the year. This, he noted, was a staggering drop of 7.4 per cent..
On the supply side, he said that non-OPEC liquids production was forecast to contract by 2.4 mb/d in 2020, compared to expected growth of 2.4 mb/d that was forecast at the start of the year, though for 2021, non-OPEC liquids is anticipated to expand by 0.93 mb/d.
“It has also been interesting to note that the US oil rig count has climbed significantly over the past month or so, rising from 189 in the week of October 2, to 236 in the week of Nov. 13.
“Crude futures in all major benchmarks remain in contango, and in terms of inventories, it is clear that destocking has continued over the past month following the trend in the third quarter of this year which saw global inventories decline across all components by around 250 million barrels (mb),” he added
The OPEC scribe said that it was estimated that Organization for Economic Co-operation and Development (OECD) commercial inventories fell by 44 mb over this period, non-OECD inventories declined by around 55 mb, and oil at sea, including floating storage, dropped by about 150 mb.