According to the IEA Oil Market Report (OMR) world oil demand is about to develop by 5.four mb/d in 2021 to achieve 96.four mb/d, recovering round 60% of the quantity misplaced to the pandemic in 2020. While oil demand is anticipated to fall by 1 mb/d in 1Q21 from already low 4Q20 ranges, a extra beneficial financial outlook underpins stronger demand within the second half of the yr. The incorporation of latest information lowered the 2019 baseline by 330 kb/d.
Global oil provide rose 590 kb/d in January, to 93.6 mb/d, as OPEC+ cuts eased and non-OPEC+ pumped extra. In February, international output is about to fall as Saudi Arabia implements a sizeable voluntary reduce. The outlook is enhancing for international locations exterior the OPEC+ alliance, with an 830 kb/d acquire anticipated in 2021 versus a 2020 lack of 1.three mb/d.
Global implied inventory attracts accelerated from 1.56 mb/d in 3Q20 to 2.24 mb/d in 4Q20. In December, OECD business shares fell for the fifth consecutive month. A month-to-month decline of 44.6 mb (1.44 mb/d) left inventories at three 063 mb, 138.three mb above their five-year common. Products led the autumn. OECD crude shares had been 62.eight mb under the May 2020 peak. January information present continued declines.
ICE Brent crude futures rose above $60/bbl in early February and the 12-month backwardation breached $four/bbl, returning costs to pre-pandemic ranges. Paper markets drove costs increased, reflecting a beneficial general financial outlook for 2H21 and OPEC+ provide cuts. Physical markets have lagged futures as differentials mirror some delays in clearing cargoes.
The rebalancing of the oil market stays fragile within the early a part of 2021 as measures to include the unfold of Covid-19, with its extra contagious variants, weigh closely on the near-term restoration in international oil demand. But contemporary help has been supplied by a extra optimistic financial outlook for the second half of the yr, together with a pledge from OPEC+ to hasten the drawdown of surplus oil inventories. The prospect of tighter markets forward lifted benchmark crude oil costs to one-year highs in early February, with Brent buying and selling at $60/bbl and WTI at $57/bbl.
(Source IEA – Image: Oilfield in North Dakota/Star Tribune)
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