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Two months ago today, the 15th OPEC and non-OPEC Ministerial Meeting took the forward-looking step of gradually increasing production, in line with the brightening outlook for both the economy and oil demand. Today marks the start of the second month of the stepped-up production increases, and our compass continues to point in the direction of a durable recovery.
Step-by-step progress is being made on providing life-saving vaccinations to the world. Around 1.9 billion doses have now been administered globally, and millions more are being given every day. We are encouraged by the international commitments to support developing countries so they can acquire sufficient vaccines, and thus improve the chances for a durable and inclusive recovery.
Turning first to the global economy, our latest projections show GDP growth of 5.5% in 2021, up from 5.4% at our last meeting and driven by expectations for a robust second half of the year.
China and the US continue to fuel the growth prospects for the year, with China’s economy on course to expand by 8.5% and the US by 6.2%. Despite the tragic second wave of COVID-19 in India, India’s economy is still expected to grow by 9.7%. The Euro-zone, where there has been a gradual easing of strict lockdowns, should benefit from pent-up consumer demand and the beginning of the summer holiday season. Growth in the Euro-zone this year is forecast at 4.2%.
The projections for oil are largely unchanged from our last meeting, with demand expected to grow by 6 mb/d to around 96.5 mb/d on average for the year, an increase of 6.6%. As with the economy, the market outlook for later this year looks especially promising. In fact, we anticipate that demand will surpass 99 mb/d in the fourth quarter, which would put us back in the range of pre-pandemic levels.
Overall, demand in countries outside the OECD should rise by nearly 6.8%, or 3.3 mb/d, this year, and by almost 6.4%, or 2.7 mb/d, in the OECD. This is a welcome turn of events from the sombre situation we experienced in 2020.
Here, I would caution that this is no time for complacency. As we know from experience over the past year, COVID-19 is a persistent and unpredictable foe, and vicious mutations remain a threat to both human health and the recovery. Furthermore, many leading economies are pumped up by record levels of fiscal and monetary stimulus, debt levels have soared, and inflation is beginning to rear its ugly head in some countries.
We are also monitoring the Joint Comprehensive Plan of Action talks that are taking place here in Vienna. IR Iran is a Founder and an extremely important and valued Member of OPEC. We anticipate that the expected return of Iranian production and exports will occur in an orderly and transparent fashion, thereby maintaining the relative stability that we have worked hard to achieve since April of last year.
Turning to the supply side, non-OPEC liquids production is now forecast to grow at a slightly slower pace than we expected last month, rising by around 700,000 b/d in 2021 to an average of 63.6 mb/d. In the US, liquids production is expected to dip slightly, to around 17.6 mb/d, despite the improving market conditions and demand prospects. Both conventional and tight crude production are forecast to decline in the US, while NGLs and biofuel output are expected to rise. In contrast to the US, liquids production is expected to grow in Canada, Brazil, China and Norway.
We continue to keep a close watch on OECD commercial oil inventories. April data showed a drop of 6.9 mb from the previous month, to 2.96 billion barrels. On the positive side, inventories have fallen by 250 mb from their peak of 3.2 billion barrels in the middle of 2020. OECD commercial stocks fell to 66 days in April 2021, 12.3 days lower than the April 2020 levels, but still 3.9 days above the 2015-2019 average.
In the US, total commercial stocks fell by more than 8% in April, to nearly 1.3 billion barrels, about 2% below the latest five-year average. Yesterday was the Memorial Day holiday in the US, the traditional start of the summer driving season, and we are hopeful this will accelerate the drawdown.
Our latest data also show that the backwardation structure of all three major benchmarks lessened slightly in April. Hedge funds and other money managers slightly raised their long positions in crude following the sell-off seen in March, with gains concentrated mainly in Brent.
Month-on-month, the actions of the Declaration of Cooperation continue to support the rebalancing process, and have helped reduce the global supply by more than 2.9 billion barrels since May 2020.
However, there continues to be significant overproduction by some of the participating countries. The overproduced volumes need to be accommodated to achieve the goals we have set for ourselves.
In this regard, the 15th OPEC and non-OPEC Ministerial Meeting agreed to extend the very generous compensation period for overproduced volumes until the end of September 2021. Our continued contributions to sustainable oil market stability depend upon all participants achieving 100% conformity and, where necessary, working dutifully to compensate for overproduction.
The advice and guidance of this Committee, along with the support of the Joint Technical Committee, is vital to supporting the Declaration of Cooperation decision-making process.
As we prepare for the 17th OPEC and non-OPEC Ministerial Meeting, allow me to draw inspiration from the renowned Russian writer Ivan Turgenev, who said – and I quote:
“If we wait for the moment when everything, absolutely everything is ready, we shall never begin.”
From the very beginning of the Declaration of Cooperation, we have never stood back and waited to act. Rather, we have worked proactively and with determination, and our efforts to restore oil market balance and stability continue to bear fruit. I look forward to the work before us today, and to our continued and valued cooperation going forward.
Distributed by APO Group on behalf of OPEC.