The International Energy Agency (IEA) on Friday revised up its 2020 global oil demand citing a smaller-than-expected demand decline in the second quarter, However, it warned of persisting concerns about the COVID-19 pandemic which can cast a cloud on the outlook. The agency now expects global oil demand to reach 92.1 million bpd in 2020, 400,000 bpd higher than its previous outlook last month.
According to the IEA’s report, some markets saw an accelerating number of COVID-19 cases, despite some progress made in several other countries. This highlights that the health crisis is not under control and can put downward pressure on the market outlook.
IEA estimated oil refining activity to fall this year by more than it anticipated last month and to expand at a slower rate in 2021. Next year, demand will likely be 2.6 million bpd lower than 2019 levels, with demand for kerosene and jet fuel dropping the most due to the decreasing number of air travels.
On the supply side, IEA says OPEC+, had shown 108% adherence to their pact to curb production. Weak demand had also forced other producers, especially the US, to cut their output. Crude supply from the US is forecast to slowly recover in this year’s remaining half. Meanwhile, while the lifting of force majeure on Libyan oil exports could provide the global oil market with another 900,000 bpd of crude by the end of 2020.
