The International Energy Agency (IEA) has raised its initial forecast for oil demand and its chances of bouncing back from the pandemic but has warned of concerns over its potential to recover properly in the wake of the coronavirus crisis, according to its annual report.
Oil
The oil and gas sector - as well as other traditional fossil fuels - have had a chaotic year, with prices reaching record lows owing to significant demand slumps owing to the virus. Prices dropped below zero for the first time ever last April in what industry specialist refer to as "Black April."
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The agency predicts a bounceback of roughly 5.7 million barrels per day (b/d) for 2021, up 230,000 b/d from its previous forecast. The report detailed that overall demand decreased by 8.7 million b/d for 2020.
The IEA claims the "fundamentals" for recovery look far stronger than they did a year ago.
The International Monetary Fund (IMF) has laid out a positive outlook for GDP recovery with many nations - particularly the US, with its stimulus packages and swift vaccine rollout - expected to lead in the recovery for the sector.
The IEA claims stocks for oil held steady in March and rose slightly for the first time in seven months.
Prices could yet come under "renewed pressure" in the coming months with world oil supply set to ramp up and shift the market from deficit towards balance, the report claims.
Global production was already on the rise in March, increasing by 1.7 million b/d as US output recovered from a sharp drop in February and OPEC+ supply edged higher, it adds.
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In the report, the IEA said: “The massive overhang in global oil inventories that built up during last year’s Covid-19 demand shock is being worked off, vaccine campaigns are gathering pace and the global economy appears to be on a better footing.”
The report predicts the market may shift drastically in the latter half of the year, with an extra 2 million b/d extra supply needed to meet the rise in demand and crude oil-fired power is forecast to increase gradually through the seasons.
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