In the past year, oil demand has plummeted due to the impact of the epidemic, and the oil and gas industry has suffered inestimable losses.
As we enter 2021, positive signals of market recovery continue to come. The latest monthly report released by the International Energy Agency (IEA) last week has injected new “boost” into global counterparts.
The IEA announced that global oil demand currently exceeds supply, and the oversupply of oil has ended. From the first quarter to the end of 2021, oil demand will rebound significantly.
With the promotion of vaccines and remarkable results in epidemic prevention and control, fuel consumption levels in China, Europe and the United States have increased significantly, and the global economy has Buoyed, oil inventories accumulated since the outbreak have gradually returned to normal. +
The IEA pointed out that OECD oil inventories fell by 25 million barrels in March to 2.951 billion barrels, which was only 1.7 million barrels higher than the average of the past five years. In the next few months, crude oil inventories are expected to continue down to average.
In the second half of the year, the international oil market showed a strong recovery trend. From the demand side, oil demand will rebound significantly compared with 2020.
In this monthly report, the IEA has slightly lowered its forecast for crude oil demand growth this year, lowering its forecast for global oil demand growth in 2021 by 270,000 barrels per day to 5.4 million barrels per day. Due to the raging epidemic in India, the IEA has lowered its demand forecast for India, but this cannot hinder the trend of increasing demand. The situation of excess oil supply no longer exists.
Looking at the supply side, the growth rate of oil supply will lag behind the recovery rate of demand.
In 2020, the international oil industry suffered a severe impact from the epidemic. OPEC+ controlled oil prices and the crude oil market by promoting production reduction policies.
The IEA stated in its monthly report that according to the current production plan of OPEC+ oil-producing countries, the growth rate of international oil supply will not keep up with the expected recovery speed of oil demand, and supply will exceed demand.
The IEA said that OPEC+’s oil production has a supply gap of 150,000 barrels per day compared with demand, and the gap is expected to expand to 2.5 million barrels per day by the end of the year.
As the gap between supply and demand expands, OPEC+’s production reduction policy will be further relaxed, and all parties have agreed to gradually relax production reductions from May this year.
OPEC+ oil output will increase by 820,000 barrels per day in 2021. The implementation rate of OPEC+ production cuts in April was 114%. Non-OPEC+ oil supply increased by 620,000 barrels per day year-on-year.
However, we need to be vigilant that the epidemic crisis in India has also brought uncertainty to the recovery of oil demand. Affected by the epidemic, India’s crude oil demand fell by 825,000 barrels per day in May. Market volatility is expected to continue this year.