OPEC, Russia meet, target stability as oil price drops to $37 per barrel

By Michael Eboh

Despite the challenges posed by the COVID-19 pandemic, the Organisation for Petroleum Exporting Countries, OPEC, yesterday, projected a 6.56 percent growth in global crude oil demand to 95.89 million barrels per day in 2021, compared to 89.99 million barrels per day in 2020.

This portends hope of increased revenue for the Nigerian economy, especially as crude oil and gas account for over 80 percent of Nigeria’s revenue.

However, the projection for 2021 world oil demand, according to OPEC, in its Monthly Oil Market Report for December, was 0.38 percent lower than the 96.26 million barrels per day earlier projected for 2021.

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It said: “For 2021, world oil demand growth is revised lower by 0.35 million barrels per day, mb/d, to the growth of 5.90 mb/d. This is due to the uncertainty surrounding the impact of COVID-19 and the labour market on the Organisation for Economic Co-operation and Development, OECD, transportation fuel outlook for the first half 2021.

“Petrochemical feedstock and industrial fuels are forecast to gain momentum on the back of improving economic activities, with total oil demand projected to reach 96.89 mb/d in 2021.”

OPEC also revised downward, global crude oil demand for 2020, by 9.77 million barrels per day, blaming it on the decline in the demand for transportation fuels.

It said: “World oil demand for 2020 is expected to decline by 9.77 mb/d, marginally lower than in last month’s assessment. Weaker-than-expected data in the OECD in the third quarter of 2020, mainly due to lower transportation fuel demand in the US and OECD Europe, led to a downward revision of around 0.18 mb/d for the OECD group.

“However, this is mostly offset by an upward revision to the non-OECD, by 0.16 mb/d. Better-than-expected oil demand in China, amid a steady recovery across various economic sectors, and improving oil demand from India support this upward revision. Total oil demand is estimated to reach 89.99 mb/d in 2020.”

OPEC also revised its global economic growth projections, stating that the global economy would contract by 4.2 percent year-on-year, Y-O-Y, compared to its earlier projection of a 4.3 percent contraction year-on-year.

It said: “Global economic growth is revised up slightly for 2020, after a better-than-expected performance in third-quarter 2020, now showing a contraction of 4.2 percent, y-o-y, compared to the previous month’s forecast of -4.3 percent.

“While the 2021 forecast remains at 4.4 percent, recent positive news about faster-than anticipated vaccination programmes in major economies provides potential upside for next year’s growth forecast.

“US economic growth remains unchanged at -3.6 percent for 2020 and 3.4 percent for 2021. The Euro-zone forecast is revised down to -7.3 percent, while the 2021 growth forecast remains at 3.7 percent. Japan’s economic forecast is revised up to -5.2 percent for 2020 but remains at the growth of 2.8 percent for 2021.”

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