Rising energy prices dampened economic recovery, and OPEC cut its oil demand forecast for the fourth quarter

On Thursday (Nov.
11), OPEC cut its global oil demand forecast for 2021 by 160,000 b/d amid soaring energy prices, as high energy prices dampened the economic recovery and oil use is not expected to return to pre-pandemic levels until later in 2022
.

OPEC expects demand for crude to average 29.
57 million b/d in the fourth quarter, well above the group's 27.
45 million b/d output
in October.
Even if OPEC plans to increase production in tandem with Russia and eight other allies, adding up to a combined 400,000 barrels per month, that will not be enough to meet global demand
.
Consuming countries such as the United States, Japan and India said the group should release more supply
.

However, in the first quarter of 2022, seasonality will push global demand for crude oil down to 26.
81 million b/d, the report said, with ministers saying they prefer to tread cautiously on production because of the potential for a glut
in the market.
OPEC will meet on December 2 to decide on production levels
for January next year.

OPEC and its allies (OPEC+) "will continue to regularly review market conditions and reaffirm participants' commitment to ensuring adequate supply and supporting the stability of global oil markets," the report said.

In its analysis, OPEC noted that spot crude oil prices rose 12% in October, attributed to "strong oil market fundamentals, coupled with expectations
of higher oil demand from the winter 'gas-to-oil'.
" ”

As the world continues to recover from the pandemic, strong demand has reduced OECD commercial oil inventories to 2.
805 billion barrels, about 163 million barrels
below the OPEC+ forecast for 2015-19.

However, the report notes that cost-conscious Indian consumers are likely to reduce their use
of oil amid soaring prices.
As a result, OPEC now expects global oil demand to average 96.
44 million b/d in 2021, up 5.
65 million b/d year-on-year (demand growth forecasts have been cut by 160,000 b/d).

For 2022, demand will increase by 4.
15 million b/d, unchanged from last month's forecast to 10.
59 million b/d
.

Its forecast for non-OPEC production was unchanged from last month's report at 63.
64 million b/d in 2021, up 660,000 b/d year-on-year; 66.
66 million b/d in 2022, up 3.
02 million b/d
year-on-year.

The report also goes on to note that many OPEC members are struggling to meet their production quotas, which has led to recent market tensions
.
For example, Angola's self-reported October crude oil production of 1.
11 million b/d was well below its allocated level of 1.
36 million b/d, while Nigeria's self-reported output of 1.
23 million b/d was well below its ceiling
of 1.
63 million b/d.

Saudi Arabia, OPEC's top power, said it was producing 9.
78 million b/d, slightly below its quota
of 9.
81 million b/d, according to the report.