Russian Energy Minister Alexander Novak participated in the OPEC+ JMMC online meeting and said that global oil demand is expected to fully recover by the second quarter of 2021, while the previous more optimistic forecast is the first quarter of 2021.
The current global oil consumption is about 93 million barrels per day, which is 7% lower than before the crisis, and there is a risk of slowing down in demand recovery; monitoring is necessary to avoid market surplus.
The current demand exceeds the supply by about 1.5-2 million barrels per day, causing the inventory level to gradually decrease. Inventories fell by about 45 million barrels in August and 34 million barrels in July. If the trend continues, inventories can be restored to the 5-year average.
Much depends on demand and how the global economy will recover. What measures will countries take to prevent the second wave of Covid-19. Current oil prices reflect market conditions. In August, OPEC+ will cut production by 7.8 million barrels per day; in August, OPEC+ will cut production compliance rate of 101 %, July is 95%.
All ministers confirmed compliance with the OPEC+ agreement, and the laggards confirmed plans to compensate for excess production. As demand recovers, oil production should gradually recover to avoid overheating the market.
