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Oil demand this year will fall by a record 9.3 million bpd up to 90.6 million bpd, follows from the new IEA forecast. In April, due to the lockdown restrictions imposed by many countries, demand is already 29 million bpd lower than a year earlier (the last time such a low level of demand was observed in 1995). This decline is explained by a decrease in movement of people and goods, as well as a reduction in fuel consumption. In May, the figure will be lower than last year by 26 million bps. In June, demand recovery may begin, but it will still be 15 million bpd less than in June 2019. The IEA expects demand to grow to 95 million bpd in the third quarter, to 97.6 million bpd in the fourth quarter, and even in December it will still be lower than last year's level (2.7 million bpd) .
The total oil supply in April due to increased production by Saudi Arabia and the UAE will increase by 1.2 million bpd compared to March, to 101 million bpd, but in May it should be reduced by a record 12 million bpd.
This will be triggered by the start of the new OPEC + deal, which implies a decrease in production by 9.7 million bpd from May 1 to May – June, by 7.7 million bpd in the second half of 2020 and then by 5.8 million bpd until the end of April 2022.
According to the IEA, OPEC + partners from among the G20 countries (including the US and Canada) are likely to reduce production by 3.5 million bps in the coming months due to low oil prices. In April, the United States, Canada, Brazil, and Norway already reduced shipments by about 1 million bpd. In general, non-cartel countries will get 2.3 million bpd less this year than last year (in the US, production will fall by 2 million bpd). As a result, in the second half of 2020, the market will again return to deficit, and oil reserves will begin to decline, the IEA expects.
Nevertheless, the agency believes that the measures announced by OPEC + and the G20 countries will not result the rapid establishment of equilibrium in the market. However, "by reducing the peak of excess supply and smoothing the growth curve of stocks, they help the complex system cope with the most difficult phase of this crisis, the consequences of which for the oil market remain very uncertain in the short term," the IEA said in a report. "In June, a gradual recovery in demand will probably start to gain momentum, although it will still be 15 million bps lower than a year ago. There is no practicable agreement that could reduce supply so as to compensate for such loss of demand in the short term, but stocks could begin to decline in the second half of the year."
source: iea.org
The total oil supply in April due to increased production by Saudi Arabia and the UAE will increase by 1.2 million bpd compared to March, to 101 million bpd, but in May it should be reduced by a record 12 million bpd.
This will be triggered by the start of the new OPEC + deal, which implies a decrease in production by 9.7 million bpd from May 1 to May – June, by 7.7 million bpd in the second half of 2020 and then by 5.8 million bpd until the end of April 2022.
According to the IEA, OPEC + partners from among the G20 countries (including the US and Canada) are likely to reduce production by 3.5 million bps in the coming months due to low oil prices. In April, the United States, Canada, Brazil, and Norway already reduced shipments by about 1 million bpd. In general, non-cartel countries will get 2.3 million bpd less this year than last year (in the US, production will fall by 2 million bpd). As a result, in the second half of 2020, the market will again return to deficit, and oil reserves will begin to decline, the IEA expects.
Nevertheless, the agency believes that the measures announced by OPEC + and the G20 countries will not result the rapid establishment of equilibrium in the market. However, "by reducing the peak of excess supply and smoothing the growth curve of stocks, they help the complex system cope with the most difficult phase of this crisis, the consequences of which for the oil market remain very uncertain in the short term," the IEA said in a report. "In June, a gradual recovery in demand will probably start to gain momentum, although it will still be 15 million bps lower than a year ago. There is no practicable agreement that could reduce supply so as to compensate for such loss of demand in the short term, but stocks could begin to decline in the second half of the year."
source: iea.org
