In a report by OPEC+ experts earlier in the week, the group forecast global oil demand in 2021 would grow by 6 million barrels per day, after demand plunged by 9.5 million bpd last year amid the pandemic.
U.S. bank Goldman Sachs said it expected the biggest jump in oil demand in history at 5.2 million bpd over the next six months, as vaccination campaigns accelerate in Europe and travel demand climbs.FX Street (Apr 28) adds this insight on prices.
“Oil is seen rising to $80/bbl, global consumption will surge 5.2m b/d over the next six months, which is 50% larger than the next biggest increase over that timeframe since 2000 ..”
As of March, OPEC + was holding 8.2 m b/d off the market. A more recent agreement had them adjusting that to 6 mb/d by July. Based on an EIA, estimate, U.S. crude will drop from 12.2 m b/d in 2019 to 11 m b/d in 2021. So just making a high level assumption, there is 8.2 mb/d that OPEC + can easily add back to the market for 2021, but the U.S. will likely have lost 1.2 m b/d versus 2019. So OPEC + and the U.S. can only add back 7 mb / d to the market in 2021 (8.2 m b/d - 1.2 m b/d). Back in Jan 2018, I mentioned that the IEA believes that 2.5 mb/d of supply is lost each year due to depletion, which needs to be made up via new production. So that is a wild card as is there another 2.5 mb/d of supply that is coming online this year from other sources to make up for annual depletion? There is Guyana, but they're not adding anywhere need 2.5 mb/d.
“Oil is seen rising to $80/bbl, global consumption will surge 5.2m b/d over the next six months, which is 50% larger than the next biggest increase over that timeframe since 2000 ..”
As of March, OPEC + was holding 8.2 m b/d off the market. A more recent agreement had them adjusting that to 6 mb/d by July. Based on an EIA, estimate, U.S. crude will drop from 12.2 m b/d in 2019 to 11 m b/d in 2021. So just making a high level assumption, there is 8.2 mb/d that OPEC + can easily add back to the market for 2021, but the U.S. will likely have lost 1.2 m b/d versus 2019. So OPEC + and the U.S. can only add back 7 mb / d to the market in 2021 (8.2 m b/d - 1.2 m b/d). Back in Jan 2018, I mentioned that the IEA believes that 2.5 mb/d of supply is lost each year due to depletion, which needs to be made up via new production. So that is a wild card as is there another 2.5 mb/d of supply that is coming online this year from other sources to make up for annual depletion? There is Guyana, but they're not adding anywhere need 2.5 mb/d.
If OPEC + and Goldman Sachs are correct in their forecasts (and Goldman Sachs' forecast is just 6 months while OPEC + is for the full year), I could see the world being a bit tight on oil by the end of the year.
Back in April, I figured that if oil hit $80 that it would be due to OPEC + holding oil off the market. Of course, I'm shifting my opinion a bit as it looks like we might see dramatic increases in oil demand this year -- caveat always being the situation with COVID-19.
No comments:
Post a Comment