The Organization of Petroleum Exporting countries ((OPEC)) on Tuesday maintained its forecast for a strong recovery in global oil demand this year as growth in China and the US will offset India's COVID-19 crisis, a prospect that supports OPEC's plan to gradually relax output restrictions. OPEC forecasts that oil demand will increase by 5.95 million b / d or 6.6% in 2021, in line with last month's monthly forecast. But OPEC cut its second-quarter demand forecast by 300000 barrels a day. "India is currently facing severe challenges related to the COVID-19 epidemic, so the economic recovery in the second quarter will be adversely affected, but momentum is expected to continue to improve again in the second half of 2021," OPEC said in the monthly report. Before the release of the report, benchmark crude oil prices were trading close to $68 a barrel, rising above a pre-epidemic high of $71 a barrel this year, but doubts about demand in India weighed on oil prices. The OPEC raised its forecast for world economic growth in 2021 to 5.5 per cent from 5.4 per cent, assuming that the impact of the COVID-19 epidemic had been "largely contained" before the start of the second half of this year. The report also showed that OPEC had increased oil production, while Iran, which was exempted from voluntary cuts because of US sanctions, increased production in April, increasing OPEC production by 30, 000 b / d to 25.08 million b / d.

Us crude oil production is expected to fall by 290000 b / d to 11.02 million b / d in 2021, higher than the previous forecast of 270000 b / d, the (EIA) said on Tuesday. Drilling activity by US oil producers has increased as oil prices have rebounded, but production growth has been weak as investors put pressure on companies to rein in spending and focus on returns. Oil production is expected to increase by 820000 b / d in 2022 to 11.84 million b / d, in line with EIA's forecast last month. Us oil and other liquid fuel consumption is expected to increase by 1.39 million b / d to 19.51 million b / d in 2021, compared with a previous estimate of 1.32 million b / d, EIA said. The agency expects US gasoline consumption to average close to 9 million b / d in the summer months from April to September, 1.2 million b / d more than last summer but nearly 600000 b / d less than in the summer of 2019. Oil and other liquid fuel consumption is expected to increase by 1.02 million b / d to 20.53 million b / d in 2022, higher than the previous forecast of 980000 b / d.

Although the two major crude oil reports do not have many bright spots, they still highlight the continued support for oil prices against the backdrop of the global economic recovery. The current judgment on the future direction of oil prices seems difficult to depart from the question of the Fed's monetary policy, and inflation expectations in the US bond market for the next five years soared to their highest level since 2006 on Monday. Obviously, under the impact of novel coronavirus, central banks around the world have greatly "released water" to stimulate the economy, taking into account the imbalance in the recovery of the global epidemic and the certainty of the relevant vaccines, the market is in an unprecedented economic environment, and the current divergence points among Fed officials also highlight the greater uncertainty about the extent and speed of the subsequent rise in inflation. Oil prices are expected to have further upside, but there may still be a lot of resistance above $68.0.

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