"China, India's Demand Recovery Speed Accelerates"
International Oil Prices Plunge for Two Consecutive Days Amid Delta Variant Concerns
[Asia Economy Reporter Hyunwoo Lee] The Organization of the Petroleum Exporting Countries (OPEC) announced that oil demand will increase next year, mainly driven by China and India, approaching the pre-COVID-19 pandemic level of 100 million barrels per day. Following this year's trend, the positive outlook suggests that global oil demand will grow as economic recovery continues next year. International oil prices fell for two consecutive days amid the spread of the Delta variant and weak second-quarter GDP figures from China.
In its July Oil Market Report released on the 15th (local time), OPEC stated, "Global oil demand next year is expected to rise by 3.4% from this year to 99.86 million barrels per day, recovering to pre-pandemic levels," adding, "Oil demand is steadily increasing and is expected to exceed 100 million barrels per day in the second half of next year."
Global oil demand was 99.7 million barrels per day in 2019 before the COVID-19 pandemic, but dropped to 91 million barrels last year due to travel and mobility restrictions caused by lockdown measures. OPEC forecasted that the suppressed consumption market has been recovering since this year, increasing oil demand, and that this market recovery will continue next year.
OPEC predicted, "Global economic growth next year is expected to be 4.1%, which is lower than this year's forecasted growth rate of 5.5%, but growth will continue supported by stimulus measures from various countries," and added, "Oil demand from China and India will surpass pre-pandemic levels, and U.S. crude oil demand will approach 2019 levels, providing room for oil prices to continue rising."
Contrary to OPEC's outlook, international oil prices recorded a sharp decline for two consecutive days. On the New York Mercantile Exchange (NYMEX), the price of West Texas Intermediate (WTI) crude oil fell 2.02% from the previous session to $71.65 per barrel. On the London ICE Futures Exchange, Brent crude closed at $73.47 per barrel, down 1.73% from the previous day.
International oil prices plunged following news of an agreement on production levels between Saudi Arabia and the United Arab Emirates (UAE) the previous day, and further declined amid reports of a more than 10% week-over-week increase in new COVID-19 cases in 46 U.S. states this week, driven by the spread of the Delta variant. Additionally, China's second-quarter GDP growth was announced at 7.9%, lower than the expected 8.1%, raising concerns that China's oil demand may not be as strong as anticipated, which widened the price drop.
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