The Organisation of Petroleum Exporting Countries (OPEC) has raised its forecast for crude oil demand growth this year on the back of an expected stronger economic recovery.
The cartel, in its April Monthly Oil Market Report (MOMR), said demand would rise by 5.95 million barrels per day (bpd) in 2021, or 6.6 per cent, up by 70,000 bpd from last month.
On Tuesday, the Nigerian National Petroleum Corporation (NNPC) reported an improvement in the supply of gas for power generation, saying that along with its Joint Venture (JV) partners, it produced a total of 223.55 Billion Cubic Feet (BCF) of natural gas in January 2021.
OPEC stated that the upward revision mainly took into account a stronger economic rebound than assumed last month, propelled by stimulus programmes and a further relaxation in COVID-19 measures.
The revision marks a change of tone from previous months, in which OPEC has lowered demand forecasts because of continued lockdowns.
As expected, oil gained further towards $64 a barrel after the report was released, although still a far cry from $70 it hit a few weeks ago.
OPEC made a small upward revision in its 2021 demand projection last month, but it has steadily lowered the forecast from seven million bpd expected in July 2020.
The group hiked its forecast of 2021 world economic growth to 5.4 per cent from 5.1 per cent, assuming the impact of the pandemic is “largely contained” by the beginning of the second half of the year.
“The global economic recovery continues, significantly supported by unprecedented monetary and fiscal stimulus. The recovery is very much leaning towards the second half of 2021,” OPEC stated.
It projected that the bulk of consumption growth this year would take place in the second and third quarters, with global demand expected to rise.
However, the organisation revised lower its oil demand estimates for the first half of this year due to new virus waves and resulting lockdowns in Europe, as well as “sluggish” first-quarter demand data.
It said the fragile and uncertain recovery would require vigilant monitoring of market developments, which included the possibility of new COVID-19 variants, rising sovereign debt in most economies and a potential further rise in inflation that could tighten monetary policies.
It estimated non-OPEC liquids supply for 2021 at 63.83mn b/d, up by 930,000 b/d from 2020.
It said there had been “sizeable drawdowns” in global inventory levels since the middle of 2020, which might continue in the coming months.
OPEC and its allies agreed earlier this month to boost their collective output by more than two million barrels a day over the coming months, betting on resurgent demand.
There has been a faltering oil price rally, which has stalled in recent weeks as some of Europe’s largest economies reimposed tight coronavirus restrictions.
The International Energy Agency (IEA) had dismissed the idea that oil was entering a “supercycle” of low supply and climbing demand, pointing to glutted global oil inventories.
OPEC has maintained supply discipline that has allowed it to regain control of oil prices since they crashed last year amid a price war and the effects of the pandemic on demand.
The cartel also slightly reduced its forecast for 2021 supply growth from outside of OPEC, inching down its forecast by 30,000 barrels a day.
Meanwhile, the Nigerian National Petroleum Corporation (NNPC) Tuesday reported an improvement in the supply of gas for power generation, saying that along with its Joint Venture (JV) partners, it produced a total of 223.55 Billion Cubic Feet (BCF) of natural gas in January 2021.
It stated that this translated to an average daily production of 7,220.22 Million Standard Cubic Feet per Day (mmscfd), representing a 4.79 per cent increase over output in December 2020.
The information is contained in January 2021 edition of the NNPC Monthly Financial and Operations Report (MFOR), according to a statement by the Group General Manager, Group Public Affairs Division of the corporation, Dr. Kennie Obateru.
The corporation stated that the daily average natural gas supply to gas power plants increased by 2.38 per cent to 836mmscfd, equivalent to power generation of 3,415MW.
From January 2020 to January 2021, it stated that a total of 2,973.01BCF of gas was produced, representing an average daily production of 7,585.78 mmscfd during the period.
“Period-to-date production from Joint Ventures (JVs), Production Sharing Contracts (PSCs) and Nigerian Petroleum Development Company (NPDC) contributed about 65.20 per cent, 19.97 per cent and 14.83 per cent respectively to the total national gas production,” it added.
Out of the total gas output in January 2021, the national oil company said a total of 149.24BCF of gas was commercialised, consisting of 44.29BCF and 104.95BCF for the domestic and export markets respectively.
This, it said, translated to a total supply of 1,428.65mmscfd of gas to the domestic market and 3,385.57mmscfd to the export market in the month under review.
“This indicates that 67.15 per cent of the daily gas output was commercialised while the balance of 32.85 per cent was re-injected, used as upstream fuel, or flared,” it stated.
To guarantee energy security, the corporation said it supplied a total of 1.44 billion litres of petrol, translating to 46.30 million litres per day, across the country in the period under review.
The NNPC also announced a 37.21 per cent decrease in cases of pipeline vandalism nationwide in the month under review.
The report indicated that a total of 27 pipeline points were vandalised in January 2021, down from the 43 points recorded in December 2020.
While the Mosimi area accounted for 74 per cent of the vandalised points, Kaduna area and Port Harcourt accounted for the remaining 22 per cent and 4 per cent respectively.
However, NNPC stated that it was working in collaboration with the local communities and other stakeholders to reduce and eventually eliminate pipeline vandalism.