Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

OPEC Sees Latest COVID-19 Surge Hitting Oil Demand

By Howard Smith - Dec 14, 2020 at 5:08PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The group just further lowered its global demand forecast for 2021.

Excitement over the rollout of the coronavirus vaccine today had oil prices surging this morning, but the rally fizzled after OPEC put out its monthly oil market report. Citing further uncertainty in the transportation sector caused by surging cases of COVID-19, the group lowered its estimates for a recovery in demand next year. 

OPEC had previously expected demand to grow by 6.3 million barrels per day (mb/d) in 2021, but the cartel now anticipates that growth will be 5.9 mb/d. Estimates for 2021 demand have been continuously decreasing since July 2020, when 2021 growth was expected to be 7.0 mb/d. 

oil rigs with a decreasing price chart against a setting sun sky

Image source: Getty Images.

The revised forecast is due to uncertainty related to how rising COVID-19 cases in certain parts of the world will affect the transportation sector through the first half of 2021. 

A further decrease in oil demand is more bad news for energy giants like Chevron ( CVX -0.63% ) and Exxon ( XOM -0.64% ). Both companies have recently announced large cuts to capital spending plans

Oil prices, of course, rely on both supply and demand. The group of oil producing nations known as OPEC+ had already agreed to keep production throttled back into 2021. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Chevron Corporation Stock Quote
Chevron Corporation
CVX
$114.41 (-0.63%) $0.73
Exxon Mobil Corporation Stock Quote
Exxon Mobil Corporation
XOM
$60.89 (-0.64%) $0.39

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
624%
 
S&P 500 Returns
141%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/05/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.