The International Energy Agency (IEA), in its April Oil Market Report, said that global oil demand could exceed supply in the second half of 2020. This assumes that OPEC+ and other major oil producers managed to cut supply by a record amount in May, four oil-importing countries (China, India, South Korea, and the US) stockpile their petroleum reserves, and demand begins to recover.
According to the report, global oil supply is set to decline by 12 million bpd in May, of which 10.7 million bpd come from OPEC+. Output cuts from on-OPEC producers are expected to reach 5.2 million bpd in Q4 2020. Non-OPEC production is forecast to decline by 2.3 million bpd in 2020 from last year.
According to IEA, global oil demand would drop by as much as 29 million bpd in April and by 26 million bpd in May, compared to the same months a year earlier. The decline is expected to begin easing in June by 15 million bpd year-on-year. In Q2 2020, demand is expected to be 2.3 million bpd lower than Q2 2019. The recovery in H2 2020 will be gradual, with demand in December expected to remain 2.7 million bpd lower than a year earlier.
This year’s refinery intake is expected to decline by 7.6 million from last year to 74.3 million bpd due to the sharp decline in fuel demand. Global refining throughput is forecast to plummet by 16 million in Q2 2020. Despite lower refining throughput, product stocks are still estimated to increase by 6 million bpd due to dwindling demand. Refining activity is expected to gradually recover in H2 2020 when demand surpasses supply.
According to preliminary data, China’s implied stock build reached 2.1 million bpd in Q1 2020, while US inventories increased by 500,000 bpd. Data from OECD showed that industry stocks fell by 35.4 million barrels to 2.87 billion barrels in February. Total OECD oil stocks reached 42.4 million barrels below the five-year average, equal to roughly 79 days of future demand. Crude oil in floating storages has increased by 22.9 million barrels to 103.1 million barrels in March.
