IEA Laments The Fragile Oil Market And Expects Quick Draw in H2 of 2021

The International Energy Agency said today, Thursday, that global oil supplies are still exceeding demand due to the continuing general isolation measures aimed at combating the Coronavirus and the spread of its strains, but vaccines should help to recover demand and quickly allow producers to pump more.

The Paris-based Energy Watch Agency kept its forecast of oil demand growth in 2021 largely stable, saying that a decline in the first quarter of this year from already low levels in the fourth quarter of 2020 will soon be reversed.

And contribute to more optimistic prospects from the International Monetary Fund for global GDP growth and stronger expectations for the recovery of the United States to compensate for the relatively slow distribution of vaccines in Europe, according to estimates by the Energy Agency.

While the market remains struggling in the short term, a pledge by members of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, to keep supplies stable during March, reduces crude oil inventories.

The Energy Agency said that oil stocks in the OCED decreased for the fifth month in December, while the implicit global withdrawal of stocks increased to 2.24 million barrels per day in the last quarter of last year from 1.56 million barrels per day in the third quarter.

The Energy Agency said that the market’s restoration of equilibrium resulted in non-OPEC + producers such as the United States and Canada cautiously boosting supplies.

But said this should not dampen the possibility that OPEC + producers would reciprocate in the second half of the year, “even if non-group producers boosted (production) faster than currently expected.”

“Renewed lockdowns, stringent mobility restrictions and a rather slow vaccine roll-out in Europe have delayed the anticipated rebound until the second half of the year,” IEA said.

The IEA said it had left its 2021 global oil demand forecast unchanged, at 96.4 million barrels per day (mbd), which represents a gain of 5.4mbd over 2020.

It added however that “the forecasts for economic and oil demand growth are highly dependent on progress in distributing and administering vaccines, and the easing of travel restrictions in the world’s major economies”.