The Organization of the Petroleum Exporting Countries (OPEC) has lowered its forecast for oil consumption for what remains of this year. If previous calculation, just a month ago, estimated the daily consumption reduction of 6.85 million barrels, this May new estimates put the daily consumption drop at 9.7 million barrels for what remains of the year.

The sharp drop in demand, as a direct consequence of the coronavirus pandemic, has caused a constant decrease, for three months, in crude oil prices, reaching an all-time low last April, when the average price of a barrel reached 15.98 dollars, the lowest in the last 21 years.

Given that the average cost of production of a barrel, depending on the type of oil, is about 30 dollars, the producing countries have been accumulating losses due to the extraction, to which must be added the accumulation of stock until the current exhaustion of storage capacity, which has given rise to the unusual fact of having to pay to sell, as was the case for Texas-type oil in the USA.

The OPEC + (members of OPEC producing countries plus Russia and others) agreed with the support of the US to a reduction of part of the production, establishing a decrease in daily extraction of about 9.7 million barrels (slightly less than 10% of world production). The agreed figure was only negotiated for the months of May and June, and coincides with the forecast of low consumption made public this week by the OPEC.

Sources from the same OPEC have stressed that with the implementation of the agreed reduction "a positive response has already begun," an open reference to the slight increase in the price of crude oil this week, reaching an average of $30 a barrel.

OPEC's forecasts, intended to prompt confidence to the oil market, do not seem to take into account some variables, such as the increase in production, in April, of several of its main members, the collapse of available storage capacity, which has led to the use of tankers as warehouses (with the consequent cost of freight), where an unknown quantity of crude oil is accumulated, and above all the coincident forecasts, from various international economic organizations, of a slow and gradual economic recovery, subject to strong limitations in the international transport of people.

It is not difficult to foresee that the OPEC will soon be forced to revise its calculations for daily crude consumption, and that therefore the oil-producing countries will have to agree to an extension of the production cut, and even to increase this reduction substantially, in the interest of reversing the low price of a barrel of crude oil.