The oil market may enter 2021 with an oversupply of 625 million barrels relative to the level at the end of 2019. The pace of recovery in demand was slower than expected in the spring, Report says, citing the International Energy Agency (IEA).
"Our calculations show that the global oil market will have an oversupply of reserves in the amount of 625 million barrels in early 2021 relative to the level of December 2019," experts say. According to their estimates, if the rate of consumption in China remains neutral, the market will absorb 183 million barrels from these reserves and by July come to a shortage of oil reserves relative to the end of 2019.
The IEA believes that global oil demand will recover more slowly than expected in April when OPEC+ countries agreed on a new mechanism for reducing production. Moreover, oil production in Libya is growing, and these volumes also need to find a place in the market. "Therefore, the decision of OPEC+ to increase oil production more gently than previously planned from January reflects the understanding that the oil market is still fragile and requires careful regulation," the IEA concludes.
In October (data on reserves are always published with a two-month lag), the OECD countries' resources fell by 55.3 million barrels, to 3.129 billion barrels. At that level, they were 183.4 million barrels above the five-year average.