OPEC raises economic growth forecast
OPEC economists on May 11 raised their forecast for global economic expansion, pointing to stimulus measures in the US economy and acceleration in Asia as sources of strength.
After a 3.5% contraction from 2019 last year, economists at the Organisation of the Petroleum Exporting Countries raised their forecast for global expansion for 2021 by 0.1 percentage points to 5.5%. They cautioned, however, that growth is conditioned by the pace at which the COVID-19 pandemic is brought under control.
With robust growth expected in major economies such as the US and China, OPEC economists also worried that inflationary pressures could undermine growth.
For 2021, OPEC expects the world economy will take in an average of 96.5mn b/day of crude oil, a 6mn b/day increase from last year, but unchanged from the April market report. Demand concerns in COVID-stricken India and Brazil are offset by the acceleration of vaccinations elsewhere in the world.
From North America, OPEC expects total US liquids output to decline by an average of 100,000 b/day, driven by inclement weather in February that idled large parts of the nation’s energy sector. Natural gas liquid and biofuels production are on pace to increase, however.
Canadian crude oil production is expected to increase by 300,000 bpd this year, while Latin American production increases by 200,000 b/day.
For the markets, OPEC economists observed that Henry Hub natural gas prices softened at the start of April because of a warming trend across North America, but have since recovered on the back of severe weather patterns in the region.