London — The February deep freeze in Texas will give OPEC a bit more room to expand market share in 2021, according to the bloc's latest oil forecast.
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OPEC's analysts kept their global oil demand outlook for the year unchanged but downgraded their projection of non-OPEC liquids supply by 230,000 b/d due to the vast US well shut-ins during the winter ice storm.
As a result, the call on OPEC crude -- the volume needed from the organization to balance global demand and supply -- will rise to 27.65 million b/d in 2021, it said in its closely watched monthly oil market report released May 11.
That compares to the group's 25.08 million b/d of crude production in April, based on secondary source estimates, the report stated.
OPEC and several allies, including Russia, have been voluntarily reining in a significant chunk of their output for the last year in order to bolster crude prices and induce draws of oil inventories that had built up after global demand plummeted due to the pandemic.
Those cuts are being gradually rolled back in anticipation of higher demand.
Though OPEC kept its demand forecast unchanged for the year at 96.46 million b/d, a rise of 5.95 million b/d from 2020, it said most of the growth will happen in the back half of the year. The organization raised its global economic growth forecast for 2021 by 0.1 percentage points to 5.5% year on year, citing stimulus measures in the US and accelerating recovery in Asian countries.
"Positive transportation fuel data from the US, and acceleration in vaccination programs in many regions provide further optimism in H2 2021," the report stated. "The assumed return to some degree of normality and improved mobility is also expected to positively affect regions such as the Middle East and Other Asia in H2 2021."
On the supply side, non-OPEC countries are now expected to produce 63.60 million b/d in 2021, a year-on-year rise of 700,000 b/d. The lowered forecast is "mainly due to the US liquids production outage of 2.2 million b/d seen in February, following the winter storms and freeze."
Extensive seasonal maintenance in Norway and Canada also caused the supply forecast to be revised down.
Monitoring the market
Breaking down the call on OPEC, the report said the estimated need for the group's crude would rise from 26.48 million b/d in Q2 to 29.54 million b/d in Q4.
OECD oil inventories stood at 2.987 billion barrels as of the end of March, 37.8 million barrels above the latest five-year average and 73.0 million barrels above the 2015-2019 average that OPEC and its allies are targeting with their production cuts.
The OPEC+ alliance, which collectively controls about half of global crude production capacity, is scheduled to meet online June 1 to assess market conditions and review plans to bring more output online.
From May to June, the coalition is scheduled to boost production by about 2.1 million b/d -- of which about 1.4 million b/d will come from Saudi Arabia, which has been implementing an extra output cut below its quota that it plans to unwind.
Saudi Arabia, the world's largest exporter of crude, said it pumped 8.134 million b/d in April, according to the report.
As it has through the pandemic, OPEC said its forecasts contain significant uncertainties due to uneven COVID-19 infection rates, the emergence of new variants and inconsistencies in vaccine deployments worldwide.
"Other factors to be monitored closely over the short term include developments in the global and regional economic outlooks, progress in industrial activity and labor markets and the effect of monetary and fiscal stimulus measures," it said.
Unit: million b/d
Source; OPEC monthly oil market report