IEA: OPEC+ to further ease cuts amid rapidly depleting oil stocks

While the rebalancing of the oil market looks fragile in the first quarter of 2021, global oil inventories are expected to decline rapidly in the second half of this year as demand increases, paving the way for OPEC+ to ease production cuts even if higher prices tempt producers outside the group to increase production, the International Energy Agency (IEA) said on Thursday.

This year, global oil demand is expected to increase by 5.4 million barrels per day (bpd) from 2020, the agency said in its February oil market report.

That’s 100,000 bpd lower than the January report’s projection when the IEA projected a 5.5 million bpd increase in demand year-over-year in 2021.

This month’s latest estimate pegs total global oil demand at 96.4 million bpd, which would recover around 60% of the volume lost to the pandemic in 2020, the IEA said today. .

The agency’s estimates are broadly in line with many analysts and other forecasters who expect demand to be weak in the first quarter of 2021 but pick up speed in the second half as vaccination rates rise and the relaxation of travel restrictions.

“While oil demand is expected to fall by 1 mb/d in 1Q21 from already low levels in 4Q20, a more favorable economic outlook underpins stronger demand in the second half,” the IEA said in its report. .

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Oil producers outside the OPEC+ alliance have begun to react to rising oil prices, the agency noted.

“Led by the prolific Permian Basin, U.S. drilling and completion rates have steadily increased in recent months,” the IEA said.

Total oil supply from non-OPEC+ producers is expected to increase by 830,000 bpd in 2021, compared to an annual decline of 1.3 million bpd in 2020.

The IEA still expects U.S. crude oil supply to remain broadly flat at around 11.2 million bpd after falling 940,000 bpd last year, while “Canada, which is now pumping at record rates, restored nearly all volumes closed at the height of demand last year. collapse,” the IEA said.

By Tsvetana Paraskova for

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Felix J. Dixon