In this interview given to Cyba Audi from Asharq Business Bloomberg, Dr Carole Nakhle, CEO of Crystol Energy, discussed the latest (April 2021) oil demand forecast by OPEC whereby the producers’ group revised its forecast ‘cautiously’ upwards.
Such revisions are in line with the overall trend we are witnessing in both economic and oil market forecasts, supported by the roll out of vaccination. For instance, the IMF improved its economic outlook for most countries due to an increase in vaccination rollout, with positive spillover on oil demand.
However, the word ‘caution’ will continue to figure out in such publications as the COVID-19 pandemic is not over yet, and over 70% of vaccines have been administered in only 10 countries. We are still a long way from victory, but in the right direction.
Dr Nakhle further commented on the accuracy of oil demand forecasts, arguing that demand is typically more challenging to forecasts than supply as there are more moving parts to consider. OPEC’s forecasts can be more cautious than those of the IEA for instance – the prerogative of a producer which also helps with discipline.
She also highlighted OPEC+’s impressive ability to bring (OECD) commercial oil inventories to their five year average, in just under a year and especially compared to the post-2014 inventories built up which took at least 18 months to bring down. This, however, has not come easy as it has required the producers’ group to implement historic production cuts. It also does not mean all troubles are over; on the contrary, with a significant spare capacity as well as new supplies coming gradually back to the market, competition for market share will re-emerge.
Watch the full discussion:
“New Opportunities 2021: Some optimism for oil markets“, Dr Carole Nakhle, Feb 2021
“Global Economy and Energy Markets Weekly Commentary – 11th Apr ’21“, Christof Rühl, Apr 2021