On Tuesday, the International Energy Agency (IEA) said that for the remainder of 2020, the global oil demand would significantly decelerate amid the economic impact of the coronavirus pandemic as most of the easy gains already achieved.
The IEA slashed its 2020 oil demand forecast by 200,000 bpd to 91.7 million bpd. It was its second downward adjustment in many months.
The agency cited the economic slowdown due to the pandemic, most notably in India, and the potential of a second wave of the virus in several parts of the world as the main factors for the slowing demand recovery.
The drawdown of crude oil stocks will also be slowed in the rest of the year as global oil production is rising. The IEA also cut its drawdown prediction, at about 3.4 million bpd, almost a million bpd cut from August prediction. It would mean oil stocks which were piled up at the height of lockdown measures will be drawn slower.
However, preliminary data for August showed industry crude oil stocks fell in the US, Europe, and Japan.
Regarding supply, the output cut pacts of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) pushed the supply up by 1.1 million bpd in August. However, recovery in the countries outside of the pact has stalled. The US output, for example, went down by 400,000 bpd due to Hurricane Laura which prompted shut-ins.
