PRESS ROOM
Strong rebound in oil prices continues
Thursday 18th February '21
Oil prices have rebounded strongly since their April 2020 lows. Brent and West Texas Intermediate (WTI) oil prices are trading above the levels they were a year ago, i.e., before the COVID-19 pandemic reached Europe. This is somewhat surprising given that demand has not recovered to pre-pandemic levels. According to the International Energy Agency (IEA) forecasts, oil demand in 2021 will recover by 5.4 million barrels per day (mb/d), after having fallen 8.8 mb/d in 2020. So, we are likely to fall short of 2019 demand by quite some margin. The Organisation of the Petroleum Exporting Countries (OPEC) and its partner countries (together OPEC+) have maintained production restraint. The group has collectively cut production by close to 10 mb/d compared to a year ago. According to IEA forecasts, if OPEC+ can maintain a hundred per cent compliance, we could see stock withdrawals of 1.1 mb/d or hundred million barrels in Q1 2021. As demand picks up later in the year, if OPEC maintains restraint, we could see even higher stock withdrawals.