Pegs global economic growth for 2022 at 4.1%
Projects total oil demand for 2021 at 96.6mbpd
By Teddy Nwanunobi
The Organisation of the Petroleum Exporting Countries (OPEC) Reference Basket (ORB) increased for the second-consecutive month in June, reaching its highest monthly average since October 2018.
According to the OPEC Monthly Oil Market Report (MOMR), which was released on Thursday, the year-to-date (y-t-d) ORB averaged $63.85 per barrel, representing a gain of $24.64, or 62.9 per cent, compared to the same month last year.
Valuechain reports that the MOMR covers major issues affecting the world oil market and provides an outlook for crude oil market developments for the coming year.
In June, investors turned increasingly optimistic about the outlook for the oil demand recovery amid expectations for a tighter global oil market in 2H21.
“Crude oil spot prices rose firmly in June, extending previous monthly gains, driven by a rally in futures markets, as well as a strengthening global physical crude market, amid higher crude demand from refiners,” OPEC said.
The ICE Brent front month rose $5.10 month-on-month (m-o-m) in June, or 7.5 per cent, to average $73.41 per barrel, and NYMEX WTI increased $6.20, or 9.5 per cent, m-o-m to average $71.35 per barrel.
Consequently, the ICE Brent and NYMEX WTI spread narrowed by $1.10 m-o-m to average $2.06 per cent in June, its lowest level since October 2020.
“The backwardation structure of all three major oil benchmarks strengthened in June on a tightening outlook for oil supply and demand fundamentals in the coming months. Hedge funds and other money managers boosted bullish positions related to crude in June, particularly in WTI, as speculators focus on expectations for rising oil prices,” it said.
On the world economy, the report stated that the global economic growth for 2022 will be 4.1 per cent.
“The global economic growth forecast for 2021 remained unchanged at 5.5 per cent. In an initial assessment, global economic growth for 2022 is forecast at 4.1 per cent.
“However, future global growth continues to be impacted by uncertainties, including the spread of COVID-19 variants and the pace of the global vaccine rollout. In addition, sovereign debt levels in many regions, together with inflationary pressures and central bank responses, remain key factors that require close monitoring.
“Nevertheless, upside potential could materialise as ongoing containment COVID-19 measures in combination with additional fiscal and monetary stimulus could turn out to be more effective than envisaged, leading to further gains in consumption and investments.
“US economic growth in 2021 remains at 6.4 per cent, followed by growth of 3.6 per cent in 2022. The Euro-zone economic growth in 2021 remains at 4.1 per cent, followed by growth of 3.0 per cent in 2022.
“Similarly, Japan’s economic growth forecast remains at 2.8 per cent for 2021, followed by growth of 2.0 per cent in 2022. After an unchanged growth forecast of 8.5 per cent in 2021, China’s economic growth forecast for 2022 stands at 6.3 per cent. India’s 2021 growth forecast remains at 9.5 per cent, followed by growth of 6.8 per cent in 2022.
“Brazil’s growth forecast for 2021 was revised up to 3.2 per cent, followed by growth of 2.5 per cent in 2022. Russia’s (economic growth) forecast for 2021 remains at 3.0 per cent, followed by growth of 2.3 per cent in 2022,” the report read.
According to the report, the total oil demand is projected to average 96.6 mbpd.
“World oil demand growth in 2021 is forecast at 6.0 million barrels per day (mbpd), unchanged from last month’s assessment, although there have been some regional revisions. Total oil demand is projected to average 96.6 mbpd. The 1Q21 was revised lower, amid slower than anticipated demand in the main OECD consuming countries. This was counterbalanced by better-than-expected data from OECD Americas in 2Q21, which is now projected to last through the 3Q21,” it hinted.
It said that solid expectations exist for global economic growth in 2022.
“These include improved containment of COVID-19, particularly in emerging and developing countries, which are forecast to spur oil demand to reach pre-pandemic levels in 2022. World oil demand is anticipated to rise by 3.3 mbpd y-o-y in 2022, while total world oil demand is projected to average 99.86 mbpd, with the 100 mbpd mark exceeded in 2H22.
“OECD oil demand is anticipated to increase by 1.5 mbpd, as OECD Americas is expected to rise firmly with US oil demand only marginally below 2019 levels, mainly due to lagging transportation fuel demand. Non- OECD oil demand is projected to show an increase of 1.8 mbpd, with gains in China and India exceeding pre-pandemic levels, supported by a respectable recovery in transportation fuels and firm industrial fuel demand, including petrochemical feedstock,” it added.
Valuechain reports that the MOMR report provides a detailed analysis of key developments impacting oil market trends in world oil demand, supply, as well as the oil market balance.