OPEC’s oil exports have jumped by 1 million barrels per day (bpd) so far in May, while the OPEC+ group started easing the production cuts by 350,000 bpd this month, tanker tracker Petro-Logistics said on Monday.
At the ministerial meeting in early April, the OPEC+ group decided to gradually return over 1 million bpd to the market between May and July. The OPEC+ collective oil production is set to rise by 350,000 bpd in both May and June and by more than 400,000 bpd in July. Additionally, Saudi Arabia will also gradually ease its extra unilateral cut of 1 million bpd over the course of the next few months, beginning with monthly production increases of 250,000 bpd in both May and June. Overall, OPEC+ is expected to return to the market as much as 2.1 million bpd by July.
The decision from early April signaled the confidence of the leaders of the OPEC+ alliance that the market would be able to absorb that much supply as vaccination programs are accelerating and people start traveling more. OPEC+ and all analysts expect global oil demand to rebound strongly in the second half of 2021 and nearly reach pre-crisis levels by the end of the fourth quarter this year.
Goldman Sachs said at the end of April that it expects global oil demand to realize “the biggest jump in oil demand ever” the next six months. The investment bank sees oil demand jumping by 5.2 million bpd over the next six months.
Despite the recent bearish concerns surrounding India’s COVID crisis, OPEC, investment banks, and the International Energy Agency (IEA) are optimistic that global oil demand is set for a strong rise this year.
The excess oil inventories of the past year have been all but depleted, the IEA said last week, noting that “The widening supply and demand gap paves the way for a further easing of OPEC+ supply cuts or even sharper stock draws.”
By Tsvetana Paraskova for Oilprice.com