Macro Oils short-term outlook: May 2021 Report

Commodity Market Report 04 May 2021

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Report summary

The oil market – and OPEC+ – are assessing the risk to demand growth from Covid-19 outbreaks in Europe and parts of Asia, including India. On the other hand, the two largest oil consuming nations, the US and China, are both showing positive signs of recovery with a near return to normal within sight. They are both forecast to see demand increases in 2021 of over 1 million b/d year-on-year. Read our new Macro Oils Monthly Update for more on: • The short-term price outlook including the Brent-WTI differential • What's behind our continued forecast for a 6 million b/d annual gain in 2021 demand • Impact of OPEC+ decisions on the supply forecast • The toll of the February freeze on US Lower 48 production

Global supply: status quo remains for growth in 2021 and 2022
- OPEC+ holds decision to increase supply gradually
- Non-OPEC supply: upward revisions mainly led by China
- US Lower 48: supply holds steady as US producers harvest cash
- A disproportionate rig recovery
- Operators clean up balance sheets
- OPEC: minor upward revisions as Iran baseline creeps up
Global demand: China and US on the road to recovery, while restrictions hit Europe/Southeast Asia demand
- Global liquids demand this year: China, US recovery path offset H1 2021 weakness
- Q1 2021:
- Q2 to Q4 2021:
- 2022: Demand expected breach 100 million b/d in Q3 2022
- Risks to the outlook