OPEC sees coronavirus hampering oil demand recovery into 2021
LONDON (Reuters) – OPEC said Wednesday that the company and its allies' attempts to support the market would be disrupted in the 2021 global oil demand slower than traditionally imagined because of increasing coronavirus cases.
The Association of Petroleum Exporting Countries has estimated in a monthly survey that demand will raise by $6.25 million per day(bpd), next year to $96.26 million bpd.
The estimate for development is 300,000 bpd less than a month earlier.
The weakening recovery of demand could help to postpone a planned increase in oil production in the next year by OPEC and its allies, an OPEC+ group.
The new paper was released next week before the OPEC+ Advisory Board meets to set policies for 30th and 1st November.
OPEC said that recent European policymakers' efforts to close down restaurants and promote home-based jobs will hit demand for the remainder of 2020. This would have an effect on the oil sector by mid-2010.
"The recovery of oil demand would be seriously hindered and weak transport and industrial demand for fuels is now projected to persist until mid-2021," said the OPEC in the study.
This week's oil prices rose to over $45 a barrel for more than two months on Wednesday, following drugmakers Pfizer and BioNTech claiming their COVID 19 therapy was more than 90% successful in initial trials.
OPEC said that the economy will soon be fostered through the first half of 2021 as "a vaccine effective and broadly spread"
OPEC+ started a historic production drop of 9.7 million bpd from 1 May, reflecting nearly 10 % of global oil intake in order to counter the fall this year's market.
In August, the reduction was decreased to 7.7 million bpd and OPEC+ plans would further taper by 2 million bpd from January next year.
Algeria has indicated it supports holding the existing cuts in effect, with COVID-19 cases increasing and rates pressured, and this week Saudi Arabia said the agreement may be updated, perhaps beyond analysts' estimates.
(David Goodman's editing)