The International Energy Agency (IEA) said on Wednesday that as the world economy begins to recover from the new crown pneumonia epidemic, and OPEC and its allies restrict production, the oversupply situation in the global oil market is alleviating.

After the International Monetary Fund (IMF) raised its forecast for global economic growth this year, the IEA also raised its forecast for the recovery of oil demand. And said: “Improved market prospects, coupled with stronger real-time indicators, prompting us to raise our expectations for global oil demand growth in 2021.”

IEA predicts that after a decline of 8.7 million barrels per day last year, global oil demand will increase by 5.7 million barrels per day to 96.7 million barrels per day. On Tuesday, OPEC raised its 2021 demand forecast to 96.5 million barrels per day.

Last year, as many countries shut down their economies in order to slow the spread of the epidemic, oil demand was hit hard. This has led to oversupply, but OPEC+ countries, including the heavyweight oil producer Russia, chose to cut production drastically in response to falling oil prices. You know, oil prices once plummeted to negative values.

However, this oversupply situation seems to have changed.

IEA said that preliminary data showed that after seven consecutive months of decline in OECD oil inventories, they remained basically stable in March and are approaching the 5-year average.

Since the beginning of this year, OPEC+ has been slowly increasing production and stated in early April that in the face of expected demand growth, it will increase production by more than 2 million barrels per day in the next three months.

Although the market performance in the first quarter was somewhat disappointing, as the epidemics in many Europe and several major emerging economies are on the rise again, as the vaccination campaign begins to have an impact, global demand growth is expected to accelerate.

IEA believes that the global oil market will undergo tremendous changes in the second half of this year, and it may be necessary to increase the supply of nearly 2 million barrels per day to meet the expected growth in demand. However, as OPEC+ still has a large amount of additional production capacity to recover, IEA does not believe that the tight supply will further aggravate.

The organization stated: “The monthly calibration of supply in the Eurozone may make its oil supply flexible to meet growing demand. If it fails to keep up with the demand recovery in time, supply can be rapidly increased or output can be lowered. “