- Crude prices closed higher on Tuesday after falling about 2% in the previous session.
- Demand in 2021 expected to grow by 6mbpd, with 5m of that in the second half.
- OPEC and its allies are expected to increase output by 550,000 bpd.
After falling about 2% in the previous session due to rekindled Covid fear, crude prices on Tuesday closed higher, reports Ship & Bunker.
Rekindled Covid fear
After falling about 2 percent in the previous session due to rekindled Covid fear, crude prices on Tuesday closed higher as the Organization of the Petroleum Exporting Countries (OPEC) signalled that the market was in good shape and outlook was bullish.
Kicking off the OPEC+ alliance meeting on Tuesday, the cartel’s secretary general, Mohammad Barkindo, said fundamentals were strong but cautioned that the market is “not completely out of the woods yet.”
Demand growth in 2021
Barkindo added that demand in 2021 was expected to grow by 6 million barrels per day (bpd), with 5 million of that in the second half.
Expected output increase
Given demand recovery around the world due to the effective rollout of the Covid vaccines, OPEC and its allies are expected to increase output by 550,000 bpd; accordingly, Rebecca Babin, senior energy trader at CIBC Private Wealth Management, noted that “We’ll see the trading continue to be choppy until Thursday when the actual meeting is held and we get the official decision.”
Pre-Covid level fuel demand
Although news media along with OPEC worried that the Delta variant could be a threat to recovery, demand recovery continues unabated: the country hardest hit by the virus, India, reported that its fuel demand will reach pre-Covid levels by the end of this year.
Dharmendra Pradhan, oil minister for India, said, “There are signs of demand resurgence due to lifting of lockdowns and gradual pickup in economy; we are confident by the end of the year, we will be in a very robust position to restore our original consumption behaviour.”
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Source: Ship & Bunker
