Trimmed demand outlook causes oil first loss in 10 days
Crude oil returned to the red territory on Thursday, halting a nine-day gaining streak after demand recovery was trimmed even in the face of production cuts and hopes that rollouts of vaccines will drive recovery.
At the session, the price of the Brent crude depreciated by 19 cents or 0.31 per cent to sell at $61.28 per barrel, while the United States’ West Texas Intermediate (WTI) declined by 13 cents or 0.22 per cent to trade at $58.49 per barrel.
The development came on the heels of a negative forecast by the Organization of the Petroleum Exporting Countries (OPEC) on Thursday in which it trimmed its oulook for a rebound in global oil demand in 2021.
In its monthly report, OPEC said it expects oil demand to rise by 5.8 million barrels a day in 2021, down 100,000 barrels a day from its January forecast, to average 96.1 million barrels a day.
OPEC said that demand fell by 9.7 million barrels a day in 2020 to average 90.3 million barrels a day, slightly lowering its estimate by 30,000 barrels a day.
The cartel said its forecast for non-OPEC supply growth in 2021 was revised down by around 200,000 barrels a day to show a rise of 700,000 barrels a day, for an average of 63.3 million barrels a day.
The global crude benchmark, Brent, had risen for the previous nine sessions, its longest sustained period of gains since January 2019.
Earlier, the International Energy Agency (IEA), in its own monthly report, said that a recovery in demand will outstrip rising output in the second half of the year to prompt a rapid stock draw of the glut of crude built up since the outbreak of the coronavirus.
However, the IEA said it remains cautious about the outlook for oil demand in the first quarter, in part due to new COVID variants, and has downwardly revised its first-quarter forecast by 100,000 barrels per day, with demand now expected to decline by 110,000 barrels per day year-over-year, to 93.7 million barrels per day.
The Energy Information Administration (EIA) said in a monthly report issued Tuesday that it expects global consumption of petroleum and liquid fuels to rise by 5.4 million barrels per day in 2021. That forecast was down 200,000 barrels from the January forecast.