- The International Energy Agency revised down its 2020 global oil demand forecast to 91.7 million barrels per day on expectations of a “treacherous” path ahead.
- “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 IEA said.
- A potential second wave of COVID-19 in Europe, demand weakness in India, and restrictions on gatherings in many countries could further cut mobility once again, the agency said in its monthly report.
- Oil prices have dropped around 40% since the start of the year.
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The International Energy Agency cut its 2020 global oil demand forecast again on Tuesday, as rising cases of COVID-19 suggest economic recovery will be slower than it previously expected.
In its closely-watched monthly report, the Paris-based agency said global oil demand will fall by 8.4 million barrels per day this year to 91.7 million barrels per day, down from the 8.1-million barrel per day contraction it forecast back in August.
The agency’s report offered a far more fragile demand outlook in its latest forecast.
“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 IEA said.
“The economic slowdown will take months to reverse completely, while certain sectors such as aviation are unlikely to return to their pre-pandemic levels of consumption even next year.”
All three major oil market forecasters have cut their demand growth outlook. OPEC slashed its forecast for global oil demand by 400,000 barrels a day on Monday to an average of 90 million barrels per day in 2020.
The US Energy Information Administration said last week it expected global oil demand to fall 8.3 million barrels per day to 93.1 million barrels per day this year. The EIA cut its estimate of 2021 demand growth by 500,000 barrels per day to 99.6 million barrels per day, compared with its August forecast.
Although demand has rapidly accelerated from its low-point in April, the path ahead looks “treacherous”, as a resurgence of new virus cases in Europe, renewed weakness in India, and restrictions on gatherings in many countries threatens an improvement in mobility and, therefore, fuel consumption, the agency said.
“With the on-coming Northern Hemisphere winter, we will enter uncharted territory regarding the virulence of COVID-19,” the report said.
A potential second COVID-wave in Europe could cut mobility once again, IEA said, although the impact would be lesser than that felt between March and May when governments first began imposing strict lockdown measures.
Benchmark Brent crude futures were trading up 1.3% at $40, and US benchmark West Texas Intermediate was up 1.6% at $37 around mid-morning European trading.
Oil prices have dropped around 40% since the start of the year.