Keisuke Sadamori, director for energy markets and security of the International Energy Agency (IEA), said that the global oil market is likely would not be dragged down severely by the coronavirus pandemic but it would face slow recovery on ample storage and uncertainty over China’s oil demand.
“There is an enormous amount of uncertainty, but we don’t expect any additional serious slowdown in the coming months,” he said.
He also added that the current demand outlook is more stable compared with three months ago. Nonetheless, he underlined the absence of a robust pickup in refining activity along with the demand for jet fuel as the major issue for the oil market.
Moreover, after recovering partially due to the pandemic lockdowns that crushed demand, crude prices have been stuck close to USD40/barrel, way below its pre-pandemic level.
As a consideration, on Friday Brent crude oil posted its first weekly loss since June, raising nervousness in the market over demand, poor refining margins, and slow economic growth, reducing incentives to draw crude and products from abundant stocks.
According to Sadamori, the developments surrounding China also needs greater attention.
China has emerged from the economic lockdown sooner than other major economies, but the country is involved in many major geopolitical tensions that cast shadows on its bright spot in the global demand destruction.
“There are so many uncertainties with regard to the Chinese economy and their relationship with key industrialized countries, with the US, and these days even Europe. It is not such an optimistic situation that casts some shadow over the growth outlook,” he elaborated.
On its monthly report on August 13, the IEA slashed its oil demand forecast for 2020. It warned that reduced air travel would lower global oil demand by 8.1 million bpd.
