Oil Demand Will Temporarily Increase By Summer
The oil market began to gradually recover from pandemic and stock market fluctuations. The oil prices continue to stabilize at just over USD 55 a barrel after rising earlier in the year. The concerns over the declining tourist flow during the Chinese New Year period are partially offset by signs of stronger demand in other countries as well as signs of a decline in oil supply in the United States.
And while China surprised the market with significant crude oil imports in the second half of 2020, the other emerging markets have also increased imports while demand in China has declined.
Active exports of crude oil and petroleum products are one of the factors contributing to the supply reduction in the United States. The export situation partly reflects the recovery of the South American economy and oil demand in general. Inventory levels are back in the five-year range and should be on average by mid-year. Last year's surplus has been largely eliminated.
Some analysts believe that the demand for oil will temporarily rise by summer as the recovery picks up steam. While there are ample reserves at the periphery of the market, oil-producing countries are likely to be able to maintain some of their production constraints, while the shale business will only be lagging behind in responding with higher production volumes. The resulting temporary shortfall in supply should temporarily push oil prices above USD 60 per barrel.