Startup Fortune, November 26, 2020: Adam Ferrari, founder of private oil and gas company Ferrari Energy comments on the forecasted rebound in oil demand while considering OPEC cuts and rising COVID-19 case numbers.
The oil and gas industry has been in a crisis due to the fluctuation of oil demand during 2020. Leaders in the industry have struggled to seek balance in the market while dealing with the decrease of consumer needs on top of Russia’s initial response to OPEC+ addressing COVID-19 damage.
Regarding the forecasted rebound in 2021 oil demand, Adam Ferrari, CEO of Ferrari Energy, stated, “According to a recent announcement by OPEC, oil consumption is now predicted to rebound, but at a slower rate than previously assumed due to the recent rise of COVID-19 cases.
The Organization of the Petroleum Exporting Countries (OPEC) published in a monthly report that the oil demand will increase by 6.54 million barrels per day next year to 96.84 million barrels per day. Due to the rise in coronavirus cases, the forecast for oil growth is eighty-thousand barrels per day, less than anticipated a month prior.
Unfortunately, dealing with any more significant decrease in demand has the potential to threaten OPEC’s supply boost plan in 2021. OPEC has not yet canceled their plan with allies to de-escalate the 2020 record-breaking oil output cuts in the upcoming year. The stakes were necessary when the coronavirus crisis forced oil prices to collapse as it dented travel and economic activity.
OPEC commented on the economic perspective in its report saying that though the third quarter of 2020 recovery from the coronavirus was impressive, the upcoming term remains delicate with multiple factors of uncertainty surrounding its outcome, especially COVID-19 trajectory.
The notable increase of coronavirus infections has OPEC doubting that the third quarter’s favorable recovery rates will continue into the fourth quarter of 2020. Such doubt has led OPEC to slowly lower its oil demand growth forecast in 2021 from the first predicted 7 million barrels per day assumed in July. In its monthly report, OPEC stated that its output declined by 50,000 barrels per day to 24.11 million barrels per day in September.
To take action in response to the fall of oil demand, OPEC+, a group consisting of OPEC along with its allies and Russia, came to a conclusion starting on May 1 to cut a record supply of 9.7 billion barrels per day. The 9.7 billion barrels per day cut was thinned to 7.7 million barrels per day in August. However, OPEC+ plans to further taper the following year by escalating supply by 2 million barrels per day from January.
About Adam Ferrari
Adam Ferrari, founder of Ferrari Energy, was born and raised in the south suburbs of Chicago, IL. He is the grandson of an Italian immigrant coal miner who worked in the mines of Coal City, IL. From an early age, Adam was taught the value and dignity achieved through a hard day’s work. The oil and gas industry provides good-paying jobs for millions of blue-collar men and women across America, and this is one of many reasons Adam and his company are such staunch supporters of the oil and gas industry. Blue-collar men and women built America, and the modern oil and gas industry keeps America moving forward.