-By Fred Ojiegbe
Nigeria has continued to experience declining oil production in the last three months as its rig count has been on downward trend, latest data from the Organisation of Petroleum Exporting Countries (OPEC) has shown. April rig count showed a decline by one, as the country recorded five as against six it recorded in March. The country had seven in February as against eight it recorded the month before.
OPEC data also showed that the 13-member organisation had minus one rig count in April, having recorded 354 as against 355 it recorded in March, while the world rig count declined by 43, as its April recorded 1,296 as against 1,339 it posted in March. Among OPEC members, Algeria and Iraq had an increase in their rig counts. While Algeria had an increase of two, having posted 27 in April as against 25 it posted the previous month, Iraq had an increase of one as its rig count for April stood at 35 as against 34 it posted the previous month. Kuwait and United Arab Emirates (UAE) suffered decline. While Kuwait had minus two, having recorded 25 as against 27 it recorded within the period under review, UAE had minus one, having recorded 43 as against 44 it recorded within the period under review. Eight other OPEC members had their rig counts unchanged within the period under review. Angola, Congo, Equatorial Guinea, Gabon, Iran, Libya, Saudi Arabia and Venezuela had 4, 0, 0, 1, 117, 12, 60 and 25, respectively. For non OPEC members, the United States of America had an impressive increase of 25, as it recorded 437 in April as against 408 it recorded in March.
Canada suffered a dismal loss of 51, as it posted 57 in April, as against 108 it posted in March. Mexico was also among the losing countries, as its rig count for April showed 41 as against 44 it recorded in March. Organisation of Economic Cooperation and Development (OECD) Americas had a decline of 25, as it posted 536 as against 561 it posted within the period under review. However, Norway made the gainers’ list as it had an increase of three, having recorded 17 as against 14 it recorded within the period under review. The United Kingdom had its rig count unchanged within the period under review, as it had nine. OECD Europe had plus two, as it recorded 57 against 55 it recorded within the period under review.
World oil demand
According to OPEC, world oil demand is assumed to have contracted by 9.5 million barrels daily (mbpd) in 2020, unchanged from last month’s assessment, and is now estimated to average 90.5 mbpd for the year. The OECD oil demand was estimated to have declined by 5.6 mbpd due to a large drop in OECD Americas and Europe, on the back of the Coronavirus (COVID-19) Pandemic. Similarly, non-OECD oil demand was estimated to have decreased by 3.9 mbpd, led by declines in Other Asia, Middle East and Latin America. For 2021, world oil demand was expected to increase by 6.0 mbpd, unchanged from last month’s estimate, to average 96.5 mbpd.
Slower-than-anticipated demand in OECD Americas during the first quarter (Q1’21), combined with the resurgence in COVID-19 infection cases in India and Brazil, caused the first half (H1’21) oil demand data to be downwardly revised. On the other hand, for the H2’21, positive weekly transportation fuels data from the US, and the acceleration in vaccination programmes in many regions allows for optimism.
OPEC also explained that the assumed return to normality and improved mobility will also positively influence regions such as the Middle East and Other Asia in H2’21. In the OECD region, oil demand was anticipated to show a 2.7 mbpd year–on–year (YoY) increase, as oil demand gained traction, especially in OECD America – the largest contributor to oil demand growth in 2021. However, oil demand in the region was not anticipated to fully recover from the 2020 decline. Rebounding transportation fuels, mainly gasoline, in addition to healthy light- and middle-distillate requirements were assumed to support the oil demand recovery going forward.
OPEC also noted that in the non-OECD region, oil demand was estimated to rise by 3.3 mbpd as compared to 2020. Demand growth was anticipated to be driven by China, followed by India and Other Asia. A healthy rebound in economic momentum was anticipated to stimulate industrial fuel demand. Demand for petrochemical feedstock was also projected to support demand growth in 2021. Similar to last month’s assessment, uncertainties remained unusually high, particularly due to issues related to the COVID-19 developments, including potential increase in infection cases, the emergence of new variants, and the acceleration or deceleration of vaccination rollouts. Other factors to be monitored closely over the short term include: developments in the global and regional economic outlooks, progress in industrial activity and labour markets, and the effect of monetary and fiscal stimulus measures.