Macro Oils short-term outlook: February 2021 Report

Commodity Market Report 05 February 2021

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Report summary

Brent has climbed to just under $60 per barrel on 4 February as Saudi Arabia's extra 1 million b/d voluntary production cut takes effect. The oil market's focus has shifted to a probable resurgence of oil demand as vaccines slowly begin to work their way into global populations. The outlook for oil price is contingent on OPEC+ decisions and the demand recovery. The course of dialogue between the US Biden administration and Iran will be another factor for prices. Highlights of our Macro Oils short-term outlook include: • With the rig recovery in the US, will Lower 48 production show growth this year? • Demand is set for a surge in the second quarter. Will that continue? • Brent is strong now, but we see pullback in the second quarter • OPEC+ production outlook hinges on 4 March meeting

Global liquids supply: upgrade to US lower 48 offset by downward revisions to OPEC
- Non-OPEC supply: minor revisions to conventional supply outlook; unconventionals downgraded
- US Lower 48: New federal policies pose no threat to short-term supply
- Drilling outlook
- Capex expectations
- Policy implications
- OPEC: minor revisions as OPEC+ holds steady at January levels
Global demand: Asia-Pacific leads the demand recovery in 2021, 2022
- Global liquids demand this year: Q1 2021 under pressure, H2 2021 sees stronger growth
- Q4 2020 and Q1 2021:
- 2021:
- Asia-Pacific:
- Americas:
- Europe:
- Russia/The Caspian:
- Africa:
- 2022: Demand exceeds pre-crisis levels in H2 2022
- Risks to the outlook