Global oil demand will soar by a record 7 million bbl/d in 2021 as the global economy recovers from the coronavirus crisis but will remain below 2019 levels, OPEC said in its monthly report.
It was the first report in which OPEC assessed oil markets next year. It said the forecast assumed no further downside risks materialized in 2021 such as U.S.-China trade tensions, high debt levels or a second wave of coronavirus infections.
"This assumes that COVID-19 is contained, especially in major economies, allowing for recovery in private household consumption and investment, supported by the massive stimulus measures undertaken to combat the pandemic," OPEC said.
Oil prices collapsed this year after global demand fell by a third when governments imposed lockdowns to stop the spread of the virus.
OPEC said in 2020 oil demand would drop by 8.95 million bbl/d, slightly less than in last month's report.
In 2021, it expects efficiency gains and remote working to cap demand growth, keeping demand below record 2019 levels.
OPEC expects to cover the lion's share of the massive projected demand spike in 2021 with demand for its crude rising by 6 million bbl/d to reach 29.8 million bbl/d.
From May 2020, OPEC and allies led by Russia have been cutting output by nearly 10 million bbl/d, or a 10th of global demand, to help prop up oil prices.
Output in countries such as the United States, Norway and Canada has also fallen, although they are not part of the OPEC+ agreement on output cuts.
OPEC said it expected non-OPEC oil supply in 2020 to fall by 3.26 million bbl/d and rise by just 920,000 bbl/d in 2021.
OPEC said it saw no growth of output from the former Soviet Union in 2021 even though Russia, Kazakhstan and Azerbaijan have been curtailing output in tandem with OPEC.
"I think OPEC is betting that some of the wells that were shut in don't come back due to reservoir damage in non-OPEC countries. But OPEC isn't immune to declines either," said Amrita Sen, co-founder of the think-tank, Energy Aspects.
She said OPEC's demand recovery predictions could prove optimistic. Energy Aspects see demand bouncing back by about 5 million bbl/d next year.
OPEC said it expected U.S. output in 2021 to grow by just 240,000 bbl/d after falling by 1.37 million bbl/d in 2020 and a rise of 1.7 million in 2019.
OPEC said it had cut supply in June by a further 1.89 million bbl/d to 22.27 million bbl/d, based on secondary sources the group uses to monitor its output. That amounts to more than 110% compliance with the pledges, according to a Reuters calculation, up from May's estimate of 84%.
OPEC estimated demand for its crude this year at 23.8 million bbl/d, up 200,000 bbl/d from last month and over 1.5 million bbl/d more than it pumped in June, suggesting maintaining current output would lead to a 2020 supply deficit.
Despite the cuts, oil stocks in industrialized countries continued to rise in May by 29.9 million barrels to reach 3.167 billion, some 210 million barrels above a five-year average.
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