Mid-Week Review – May 12, 2021

IEA May Oil Market Report

Global oil consumption is now forecast to rise by 5.4 mb/d in 2021, 270 kb/d lower than in our previous Report. Europe and OECD Americas have been revised down by 320 kb/d and 515 kb/d respectively in 1Q21, while India’s Covid crisis led us to downgrade its demand in 2Q21 by 630 kb/d. The forecast for 2H21 is left roughly unchanged, however, based on expectations that vaccination campaigns continue to expand and the pandemic largely comes under control.

EIA May Short-Term Energy Outlook

The May Short-Term Energy Outlook (STEO) remains subject to heightened levels of uncertainty because responses to COVID-19 continue to evolve. Economic activity has increased significantly after reaching multiyear lows in the second quarter of 2020. The increase in economic activity and easing of COVID-19-related restrictions have contributed to rising energy use. U.S. gross domestic product (GDP) declined by 3.5% in 2020 from 2019 levels. This STEO assumes U.S. GDP will grow by 6.2% in 2021 and by 4.3% in 2022. Our forecast assumes continuing economic growth and increasing mobility with easing COVID-19-related restrictions, and any developments that would cause deviations from these assumptions would likely cause energy consumption and prices to deviate from our forecast.

What We Know about the Colonial Pipeline Cyberattack

The ransomware attack that forced the shutdown of a vital pipeline delivering fuel from the Gulf Coast to the Northeastern United States has caused panic among motorists as thousands of fueling stations have run out of fuel. The crisis may last only a few days, as most energy experts predict, but it has revealed a disturbing truth: The attack, which the Federal Bureau of Investigation said was carried out by an organized crime group called DarkSide, has highlighted the vulnerability of the American energy system.

Oil Glut Returns to Near Pre-Pandemic Levels

The oil supply glut that built up after the pandemic forced producing countries to slash output has almost returned to normal levels, the International Energy Agency said Wednesday. But in its monthly report, the IEA cut its 2021 global demand growth forecast by 270,000 barrels to 5.4 million barrels a day. Demand in Europe and the Americas in the first quarter was weaker than previously thought, the IEA said. The agency cut its second-quarter forecast for Indian demand as the country struggles with high coronavirus infection rates.