The International Energy Agency said faster oil market rebalancing could present OPEC+ with an opportunity to ramp production in 2021. IEA revised up its demand expectations for 2020 and signalled ongoing supply weakness in US shale.
Oil demand predicted by the IEA to grow 3 million b/d more than supply in 2021 as it released its first estimates for next year in its June 16 outlook. The agency gave some glimmers of optimism around demand, seeing growth of 5.7 million b/d next year and revising up its expectations by almost 500,000 b/d for 2020. The IEA predicts a decline of 8.1 million b/d. Even with the bounce back that still puts demand at 97.4 million b/d, its nearly 2.4 million b/d below 2019.
The biggest drag on oil demand is set to be from the aviation sector that will last well into 2022. Before rebounding by just 1 million b/d in 2021, demand for jet/kerosene will drop by 3 million b/d in 2020. Jet fuel demand will depend heavily on the containment of the virus, which is unlikely to be completely achieved until a vaccine is found and widely administered, which could take up to 18 months.
