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Oil Market Snapshot – February 2021 Brent Adds c. $10/bbl In February As Inventories Fall And Texas Cold Snap Hits Permian

  • Brent started February at $56.30/bbl and ends it above $65/bbl, with inventories continuing to draw and the Texan cold snap temporarily hitting Permian production
  • We see Brent averaging $56.96/bbl in 2021 (+$3.37/bbl), with likely some downward pressure on prices from mid-year as production starts to respond and OPEC+ cuts unwind
  • Our 2021 demand growth forecast is unchanged at +5.83 million b/d, with ongoing restrictions in the OECD giving way to economic recovery from 2Q20
  • Globally, COVID cases are declining after their most recent peak. New vaccine-resistant COVID variants may pose a risk to this, but virologists suggests such a risk is relatively small
  • The majors had an unsurprisingly poor 2020, collectively losing money every quarter accompanied by large asset writedowns for many, but not all majors will increase capex in 2021
  • Strengthening prices make a quota increase at 4th March's OPEC+ meeting very likely, though there will have to be compromises made to keep the deal together
  • As shale stutters, deepwater gathers momentum, with Latin America continuing development and Norwegian COVID tax breaks providing the catalyst for a 2021-22 mini-boom
  • Our global supply growth estimate for 2020 increases to -6.25 million b/d (+20,000 b/d on previous)
  • We increase our 2021 supply growth forecast to 3.53 million b/d (+130,000 b/d on previous), as OPEC+ cuts unwind and Libya's return hits the market

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