OPEC has revised down its outlook for oil demand for the first quarter 2021, from 94.17 to 93.22 mbpd and increased its forecast for the rest of the year.

This enforces our base case scenario published in a previous article of a short term correction in oil prices before it resumes its rally again.

OPEC total world oil demand estimates

January estimates92,9282,5590,9593,5694,1795,6696,3797,38
February estimates93,1082,8291,1893,8993,2295,9297,0297,94

As a result, the oil short supply gap in the first quarter is expected to be much narrower, reaching a certain equilibrium between supply and demand.

Oil prices have erased nearly half of this week gains and are expected to retrace further down before resuming the upward trend.