The International Energy Agency (IEA) on Tuesday revised downward its 2020 oil demand forecast, citing caution about the pace of economic recovery from the pandemic as a major factor for the review.
The Paris-based agency expects demand to fall even further by 8.4 million barrels per day in 2020, compared to its earlier estimate of 8.1m bpd as a result of “continued teleworking and weak aviation sector”, amongst other factors.
In its latest monthly report on the global oil demand prospects, the IEA cuts its 2020 outlook by 200,000 barrels per day (bpd) to 91.7 million bpd.
The agency projected: “We expect the recovery in oil demand to decelerate markedly in the second half of 2020, with most of the easy gains already achieved.
“The economic slowdown will take months to reverse completely … in addition, there is the potential that a second wave of the virus (already visible in Europe) could cut mobility once again.”
The IEA cited renewed rises in COVID-19 cases in many countries and related lockdown measures, continued remote working and a still weak aviation sector as hurting oil demand.
For instance, it stated that China, which emerged from lockdown sooner than other major economies and provided a strong prop to global demand, has sustained a strong recovery but that a virus upsurge in India contributed to the biggest demand drop since April.
According to the agency, increasing global oil output and the downgraded demand outlook indicated a slower draw on crude oil stocks which piled up at the height of lockdown measures.
The IEA projected implied stock draws in the second half of the year of about 3.4 million barrels per day, representing nearly one million bpd less than it predicted in August, with July storage levels in developed countries again reaching record highs.
Meanwhile, OPEC on Monday further cuts its oil demand projection by 400,000 bpd for this year, despite a pick-up in consumption from OECD countries.
According to the oil exporters’ group, oil demand is expected to decline by 9.5m bpd, resulting in overall demand of 90.2m bpd this year.