The oil market is fairly balanced at present with demand slightly exceeding supply, Russia’s Deputy Prime Minister Alexander Novak told reporters on Wednesday.
Russia, as OPEC’s key partner in the OPEC+ production deal, is ramping up its oil production between May and July, as per the group’s agreement to gradually return over 1 million bpd to the market between May and July.
The alliance, which decided in early April to start boosting production as of May, reiterated its view that demand would be rising and able to absorb more supply at a meeting at the end of April and did not tweak production schedules, although India’s COVID crisis was already dampening fuel demand in the world’s third-largest oil importer.
Novak saw the oil market as balanced last month, as well. The market is balanced, and if a deficit occurs, OPEC+ could always decide to pump more, Russia’s top oil policy negotiator said days before the coalition left its production plans through July unchanged.
Speaking to reporters in Moscow today, Novak said oil prices are currently stable, which suggests that the market is balanced, with demand slightly exceeding supply.
“There is definitely a deficit on the market, that’s why oil stocks from last year are drawing down toward the five-year average,” Novak said, as carried by Russian news agency TASS.
Last week, both the International Energy Agency (IEA) and OPEC kept upbeat forecasts of global oil demand despite the weaker-than-expected first half of 2021 due to the Indian coronavirus resurgence and weaker Q1 for U.S. and European fuel demand.
According to the IEA, the excess oil inventories of the past year have been all but depleted, and a strong demand rebound in the second half this year could lead to even steeper stock draws.
OPEC also expressed optimism in its monthly report last week that accelerating vaccination programs and rising fuel demand would raise global oil demand by 5.95 million bpd this year despite the COVID crisis in India.