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James Hyerczyk
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WTI and Brent Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher late Tuesday after OPEC raised its forecast for growth in world oil demand this year on expectations the pandemic will subside, providing help for the group and its allies in their efforts to support the market, Reuters added.

At 05:23 GMT, June WTI crude oil is at $60.17, up $0.42 or +0.70% and June Brent crude oil is trading $63.68, up $0.40 or +0.63%.

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Demand Expected to Rise 6.6% in 2021:  OPEC

Demand will rise by 5.95 million barrels per day (bpd) in 2021, or 6.6%, the Organization of the Petroleum Exporting Countries forecast in its monthly report. That is up 70,000 bpd from last month, Reuters reported.

“As the spread and intensity of the COVID-19 pandemic are expected to subside with the ongoing rollout of vaccination programs, social distancing requirements and travel limitations are likely to be scaled back, offering increased mobility,” OPEC said in the report.

The upward revision marks a change of tone from previous months, in which OPEC has lowered demand forecasts because of continued lockdowns. A further recovery could bolster the case for OPEC and its allies, known as OPEC+, to unwind more of last year’s record oil output cuts, Reuters said.

OPEC made a small upward revision in its 2021 demand projection last month, but it has steadily lowered the forecast from 7 million bpd expected in July 2020.

The group raised its forecast of 2021 world economic growth to 5.4% from 5.1%, 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,” OPEC said. “The recovery is very much leaning towards the second half of 2021.”

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Daily Forecast

Oil prices were also supported on Tuesday by tensions in the Middle East after the Yemen-based Houthi movement said it fired missiles on Saudi oil sites and on an expected drawdown in crude oil inventory in the United States.

U.S. stockpiles were expected to have dropped last week for a third straight week, while distillate and gasoline inventories likely grew, a preliminary Reuters poll showed on Monday.

The poll was conducted ahead of reports from the American Petroleum Institute (API) an industry group, due for release later on Tuesday at 20:30 GMT and the Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy, on Wednesday.

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