According to a new IEA report, global oil consumption is now forecast to rise by 5.4 mb/d in 2021, 270 kb/d lower than in its previous report.
Namely, Europe and OECD Americas have been revised down by 320 kb/d and 515 kb/d respectively in 1Q21, while India’s Covid crisis led us to downgrade its demand in 2Q21 by 630 kb/d.
The forecast for 2H21 is left roughly unchanged, however, based on expectations that vaccination campaigns continue to expand and the pandemic largely comes under control.
According to the report, world oil supply rose 330 kb/d to 93.4 mb/d in April and will increase further in May as the OPEC+ alliance continues to ease output cuts.
Based on the current agreement, global oil production is set to grow by 3.8 mb/d from April to December. For 2021 as a whole, world oil production expands by 1.4 mb/d year-on-year versus a collapse of 6.6 mb/d in 2020. Canada leads non-OPEC+ with growth of 340 kb/d while the US is set to contract by a further 160 kb/d.
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What is more, global refinery throughput in 2021 has been revised lower on demand downgrades, newly announced temporary and permanent shutdowns and in anticipation of a strong hurricane season in the US.
As downward revisions mostly affected 2Q21, we maintain our forecast of a strong ramp-up in refining activity in the next four months, with refinery runs expected to peak in August. After a 7.4 mb/d decline in 2020, refinery intake is expected to increase by 4 mb/d in 2021.
…as IEA noted.
OECD industry stocks fell by 25 mb to 2 951 mb in March, reducing the overhang versus the 2016-2020 average to a marginal 1.7 mb. Product stocks led the draw by 31.3 mb, while crude inventories rose by 6.1 mb.
The global supply and demand balance shows implied stock draws easing to 820 kb/d in 1Q21 from 2.28 mb/d in 4Q20. April data for the US, Europe and Japan show that industry stocks fell by a combined 5.8 mb in total, led by crude, NGLs and feedstocks in the US.
Crude prices rose in April and May boosted by strong economic trends, supply-side concerns, and despite surging Covid cases in some regions. Crude futures rallied by some $7/bbl from a 5 April trough, to $68.81/bbl for ICE Brent and $65.31/bbl for NYMEX WTI on 10 May. Backwardation increased on both contracts.
Concluding, North Sea Dated prices rose from a deep discount in early April to a premium of $0.91/bbl in early of May. However, grade differentials weakened in April.
