A stronger global economy this year will accelerate oil demand growth to 5.5 million barrels per day (bpd), US Energy Information Administration (EIA) SAPS in its short-term energy outlook for April this week, boosting demand growth by 200,000 bpd
Global economic growth is now expected at 6.2% in 2021, up 0.4 percentage points from the STEO in March, according to Oxford Economics estimates that the EIA uses to model predictions.
Next year, global oil demand is set to grow another 3.7 million barrels per day in 2021 and surpass pre-pandemic levels in 2019. World oil consumption is set at an average of 101.3 million barrels per day. in 2022, shows the latest EIA estimates.
The increase in global oil demand in 2021 was raised by 200,000 bpd, while the estimate of growth in 2022 was revised by 100,000 bpd compared to March forecast, which 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 rising global oil demand than OPEC. The latest upward revision by the US administration puts this year’s demand growth still below the OPEC estimate, which had it at 5.9 million bpd in its March Oil Market Report. OPEC’s April monthly report is due to be published on Tuesday, April 13th. In its 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 widespread bottlenecks in major European economies and high unemployment rates. in the United States slowing recovery.
Similar video: Conditions are right for a second shale boom
Last week, the OPEC + Joint Technical Committee (JTC) reportedly revised its demand growth estimate at 5.6 million bpd for 2021.
However, OPEC + signaled confidence demand returned strongly at the end of this year, deciding to return about 2 million barrels per day by July, reducing production cuts by more than 1 million, and Saudi Arabia gradually reversing the additional reduction of 1 million barrels per day.
The key question for the oil market and for all forecasters is now whether the expectations of a solid increase in oil demand will materialize in the second half of the year. The key wild card, of course, is the pandemic and the ability of large economies to break out of bottlenecks and other restrictions with strong economic growth. Signs from the United States and China indicate robust growth. The continued light monetary policy in many will also support economic activity and, as an extension, rising oil demand. Advances in vaccination programs would allow more people to start traveling more, including on international air routes, which will boost not only savings but also the demand for aircraft fuel that has been severely affected by the pandemic.
Despite persistent uncertainties about the pace of recovery, most analysts continue to expect strong economic growth in the second half of 2021, which in turn will increase oil demand.
The EIA expects global oil markets to “become more balanced” in the second half of 2021.
Related to: OPEC + was wise to ease exit cuts, despite demand concerns
“The projected increase in global oil supply will contribute to a largely balanced market in the second half of 2021. However, the forecast largely depends on future OPEC + production decisions, the responsiveness of the Tight US oil production at oil prices and the pace of oil rising demand, among other factors, “the EIA told STEO in April.
The US shale will respond to higher oil prices by increasing production between the second quarter and the fourth quarter of 2021, EIA estimates show. However, the averages for 2021 and 2022 for total US crude oil production were reduced by about 100,000 bpd and 160,000 bpd, respectively, from the March forecasts.
American oil production is set at on average 11.04 million bpd this year, the latest projections show, down from 11.1 million bpd estimate from last month. Production in 2022 will average 11.9 million bpd, according to April estimates, down from 12.0 million bpd expected in March. However, last month, the EIA already raised its estimate for 2022 by up to 500,000 bpd due to higher oil prices.
This year, due 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 by the fourth. quarter, the EIA said. In the fourth quarter of next year, US oil production is expected to average over 12 million bpd – to 12.18 million bpd.
Despite the spending discipline of major US producers, higher oil prices are set to bring the shale spot back on a growth trajectory, even though this growth is slower than what we saw before the pandemic.
By Tsvetana Paraskova for Oilprice.com
More top readings from Oilprice.com: