A stronger global economy this year will accelerate the growth of oil demand to 5.5 million barrels per day (bpd), the US Energy Information Administration (EIA) dit in its short-term energy outlook from April this week, increasing its demand growth forecast by 200,000 bpd.
Global economic growth is now expected to be 6.2% in 2021, 0.4 percentage points higher than the March STEO, according to Oxford Economics estimates that the EIA uses to model forecasts.
Next year, global oil demand will increase by 3.7 million barrels per day more than in 2021 and surpass pre-pandemic levels from 2019. World oil consumption will average 101, 3 million barrels per day in 2022, according to the latest EIA estimates.
Global oil demand growth in 2021 rose by 200,000 bpd, while the 2022 growth estimate was revised by 100,000 bpd March forecasts, which had set demand growth at 5.3 million bpd this year and 3.8 million bpd in 2022.
The EIA has slightly more conservative estimates of growing global oil demand than OPEC. The latest upward revision by the US administration places this year’s demand growth still below OPEC’s estimate, which was at the same time. 5.9 million bpd in its monthly oil market report. OPEC’s April monthly report is due to be published on Tuesday 13 April. In the March report, OPEC raised its outlook for the second half of 2021. However, it revised its oil demand estimates for the first half of 2021 due to prolonged closures in the major European economies and high unemployment rates in the United States slowing the recovery.
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Last week, the OPEC + Joint Technical Committee (JTC) reported that it had revised the estimate of demand growth up to 5.6 million bpd for 2021.
However, OPEC + he pointed out confidence demand rebounded sharply later this year, deciding to return around 2 million bpd in July, reducing production cuts by more than a million and Saudi Arabia gradually reversing its additional reduction of 1 million bpd. bpd.
The key question for the oil market and all forecasts now is whether expectations of robust growth in oil demand will materialize in the second half of the year. The key wildcard, of course, is the pandemic and the ability of major economies to get out of closures and other constraints with strong economic growth. Signs from the United States and China point to strong growth. The ease of monetary policy in many continents will also support economic activity and, as an extension, the growth of oil demand. Progress in vaccination programs would allow more people to start traveling more, including international air routes, which will stimulate not only economies but also the demand for aircraft fuel, which has been severely affected by the pandemic.
Despite persistent uncertainties about the pace of recovery, most analysts continue to expect strong economic growth during the second half of 2021, which in turn is expected to increase demand for oil.
The EIA expects global oil markets to “become much more balanced” in the second half of 2021.
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“The projected increases in world oil supply will contribute to a largely balanced market during the second half of 2021. However, the forecast largely depends on OPEC + ‘s future production decisions, on the responsiveness of U.S. oil production adjusted for oil prices and the pace of oil demand growth, among other factors, “the EIA told the April STEO.
The US shale will respond to rising oil prices by increasing production between the second quarter and the fourth quarter of 2021, according to EIA estimates. However, the 2021 and 2022 averages for total U.S. crude production fell by about 100,000 bpd and 160,000 bpd, respectively, from March forecasts.
American oil production is set at average 11.04 million bpd this year, the latest projections are shown, unlike 11.1 million bpd last month’s estimate. Production in 2022 will average 11.9 million bpd, according to the April estimate, below the 12.0 million bpd forecast for March. However, last month, the EIA had already raised its 2022 estimate to 500,000 bpd due to higher projected oil prices.
This year, thanks to expectations that WTI crude oil prices will remain above $ 55 a barrel, U.S. oil production will rise from an average of 10.9 million bpd in the second quarter to nearly 11 , 4 million bpd in the fourth quarter, the EIA said. In the fourth quarter of next year, U.S. oil production is expected to exceed 12 million barrels per day (12.18 million barrels per day).
Despite the spending discipline of major U.S. producers, an increase in the price of oil will be set that will put the shale patch back on a growth trajectory, even if that growth is slower than we saw. before the pandemic.
By Tsvetana Paraskova for Oilprice.com
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