Gelnloch Energy's forecast sees a continuing reduction in oil inventories through the remainder of the year, but with higher inventories in 2020 and a larger build in 2021, due mainly to revisions in earlier estimates of supply and an earlier and stronger than expected recovery in the US onshore. Both the IEA and OPEC have released updated long-term oil demand forecasts over the last month and the long term demand section of the report has been updated to include these. This section has also been expanded to look at some of the work that has been done on carbon pricing, in order to try and understand why the long term forecasts are so divergent and what is the most likely path. The US onshore oil rig count is rising again and some of the early 2021 budget estimates indicate the rebound could be stronger than previously thought.
A few key points:
In the expectation case, a structural supply deficit emerges in 2023 and continues beyond as demand recovers while supply stagnates. The structural supply deficit is exacerbated by higher demand in the OPEC case.
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