Opec leaves demand outlook unchanged amid signs of economic recovery

The US, will be the largest contributor to oil demand growth this year, Opec said

A flare stack is pictured next to pump jacks and other oil and gas infrastructure near Odessa, Texas. Oil demand is expected to grow at 6 million bpd with total consumption expected to hit 96.6 millioShow more

Opec left its outlook for global demand growth unchanged for the second consecutive month as it reflected on positive developments in mobility due to the easing of Covid-19 restrictions.

Oil demand is expected to grow at 6 million barrels per day with total consumption expected to hit 96.6 million bpd, the group said in its monthly oil markets report on Thursday.

Demand from the Organisation for Economic Co-operation and Development group of countries is expected to increase by 2.7 million bpd with the gains largely expected in the second half of the year.

The Americas region of the OECD bloc, led by the US, will be the largest contributor to oil demand growth this year as the world's biggest economy continues to recover from the pandemic, Opec said.

Its growth will be supported by "rebounding transportation fuels, mainly gasoline and healthy light- and middle-distillate requirements", the group said.

In spite of the growth, oil demand growth in the region is not expected to "fully recover" to pre-pandemic levels.

Demand in the non-OECD region is expected to rise by 3.3 million bpd, with China taking the lead. India, which is in the grips of a debilitating second wave of the pandemic, will follow in terms of growth.

"A healthy rebound in economic momentum is expected to stimulate industrial fuel demand. Demand for petrochemical feedstocks is also projected to support growth in 2021," Opec said.

Second quarter demand data for India, the world's third-biggest consumer of crude, is expected to be lower than for the same period last year.

"As Covid-19 cases come under control and restrictions are eased towards 3Q21, oil demand, led by transportation fuel, is projected to show solid gains throughout the reminder of year," the report said.

India, has the second-highest infection numbers for Covid-19, with figures closely approaching the 30 million mark. Over 363,000 people have lost their lives to coronavirus in India, according to Worldometer, which is tracking the pandemic.

Earlier this month, Opec+, the supergroup, which is headed by Saudi Arabia and Russia, voted to stick with the current plan of bringing 2 million bpd of output to the market, despite the prospect of a return of Iranian barrels if sanctions lift.

The group said conformity to its current levels of production cuts reached 114 per cent in April.

Oil prices continued to trade above $70 per barrel on Friday in early trading, with Brent, the international benchmark, at $72.25 per barrel at 8.22am UAE time. West Texas Intermediate, which tracks US crude grades, was trading at $70.1 per barrel.