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In the past year, oil demand has plummeted due to the impact of the epidemic, and the oil and gas industry has suffered unpredictable losses.

Entering 2021, positive signs of market recovery continue to come. The latest monthly report released by the International Energy Agency (IEA) last week injected a new "cardiotonic agent" into its global counterparts.

The IEA announced that the current global oil demand has exceeded supply, and the state of oversupply of oil has ended. From the first quarter to the end of 2021, oil demand will rebound sharply.

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With the promotion of vaccines and the remarkable results of epidemic prevention and control work, fuel consumption levels in China, Europe and the United States have increased significantly, the global economy has been boosted, and the oil stocks accumulated since the outbreak of the epidemic have gradually returned to normal conditions.

The IEA pointed out that the OECD’s March oil inventories fell by 25 million barrels to 2.951 billion barrels, which is only 1.7 million barrels higher than the 5-year average. In the coming months, it is expected that crude oil inventories will continue to decline to an average level.

In the second half of the year, the international oil market showed a strong recovery trend. From the demand side, oil demand will rebound sharply compared to 2020.

In this monthly report, the IEA slightly lowered its crude oil demand growth forecast for this year, and lowered its 2021 global oil demand growth forecast by 270,000 barrels per day to 5.4 million barrels per day. Due to the raging epidemic in India, the IEA lowered its demand forecast for India, but this cannot hinder the trend of increasing demand, and the oversupply of oil no longer exists.

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Looking at the supply side, the growth rate of oil supply will lag behind the recovery rate of demand.

In 2020, the international oil industry was hit hard by the epidemic. OPEC+ adjusted oil prices and the crude oil market by advancing production reduction policies.

The IEA stated in the monthly report that according to the current OPEC+ production plan of oil-producing countries, the growth rate of international oil supply will not keep up with the expected recovery rate of oil demand, and there will be a situation in which supply exceeds demand.

According to the IEA, OPEC+'s oil production has a supply gap of 150,000 barrels per day compared to demand, and it is expected that the gap will expand to 2.5 million barrels per day by the end of the year.

As the gap between supply and demand widens, OPEC+'s production reduction policy will be further loosened, and all parties have agreed to gradually relax production reduction efforts from May this year.

OPEC+ will increase oil output by 820,000 barrels per day in 2021. The OPEC+ production cut implementation rate in April was 114%. Non-OPEC+ oil supply increased by 620,000 barrels per day year-on-year.

But what needs to be vigilant is that the epidemic crisis in India has also brought uncertainty to the recovery of oil demand. Affected by the epidemic, India's crude oil demand fell by 825,000 barrels per day in May. It is expected that market volatility will continue this year.