The International Energy Agency (IEA), the autonomous intergovernmental organisation, has increased its 2020 oil demand forecast as it warned that the spread of Covid-19 poses new risks to the future oil outlook.
Today, IEA raised its forecast to 92.1 million barrels per day (bpd), a 400,000-bpd increase from its outlook last month, as the easing of lockdown measures in many countries has caused a rebound to fuel deliveries in May and June.
Despite that, global oil supply fell by 2.4 million bpd in June, to a 9-year low of 86.9 million bpd. Meanwhile, crude oil floating storage fell by 34.9 million barrels, to 176.4 million barrels, from the all-time high seen in May.
The IEA said in its monthly report: “While the oil market has undoubtedly made progress … the large, and in some countries, accelerating number of Covid-19 cases is a disturbing reminder that the pandemic is not under control and the risk to our market outlook is almost certainly to the downside.”
Oil refining activities in 2020 are also set to decline by more than the organisation had expected last month and to grow less in 2021, IEA said.
“For refiners, any benefit from improving demand is likely to be offset by expectations of much tighter feedstock markets ahead. Refining margins will also be challenged by a major product stocks overhang from the very weak second quarter of 2020,” the IEA said.
Around the world, demand dived by 16.4 million bpd in the second quarter of 2020 in response to national lockdowns and international travel bans.
Demand in 2021 is anticipated to be 2.6 million bpd below its 2019 levels, as kerosene and jet fuel will make up about three-quarters of the losses due to reduced air travel.
However, a quick recovery of demand in large consumer counties China and India is hoped to lead to a partial market recovery and some stability in 2021.