A worker holds a fuel pump nozzle at a gas station in Shah Alam, Malaysia, on Tuesday, January 12, 2021.
Samsul Said | Bloomberg | Getty Images
LONDON – The International Energy Agency on Tuesday cut its forecast for global oil demand for 2021, citing growing cases of Covid-19 and renewed blocking measures that will further limit mobility.
The IEA said it now expects world oil demand to recover by 5.5 million barrels a day, to 96.6 million this year. This reflects a downward revision of 0.3 million barrels from last month’s assessment and follows an unprecedented collapse of 8.8 million barrels a day last year, when the coronavirus pandemic hit global oil markets .
The latest IEA report on the oil market comes at a time when countries continue to implement strict public health measures in an attempt to stem the spread of the virus, with blockages imposed in Europe and parts of China.
The Paris-based energy agency said growth in demand for oil is expected to decline slightly during the first three months of the year, in the wake of stricter government plans that require additional travel restrictions.
This is expected to reduce global mobility once again, prompting the IEA to reduce its forecast for the first quarter of oil demand growth to 94.1 million barrels per day. This would bring oil demand back to levels close to the previous year and reflect a downward revision of 0.6 million barrels from the December oil market report.
“The global launch of the vaccine is putting the fundamentals on a stronger path for the year, with supply and demand returning to growth mode after the unprecedented collapse of 2020,” the IEA said in its attentive report.
“But it will take more time for the demand for oil to fully recover, as new blockages in several countries weigh on fuel sales,” he added.
Oil prices
Oil prices have soared in recent weeks, supported by optimism about Covid’s vaccine launches and a surprise cut in oil production by OPEC chief Saudi Arabia.
However, the relatively slow rate of inoculations has raised doubts about when economies can recover.
International benchmark Brent oil futures traded at $ 55.26 a barrel on Tuesday morning, up more than 0.9%, while US West Texas Intermediate futures stood at $ 52.51, around 0, 3% above.
Both benchmarks fell more than 2.2% in the previous session, marking their worst daily performance since December 21.
Oil pumping monkeys, also known as “shaking donkeys”, in an oil field of Rosneft Oil Co. near the village of Sokolovka, in the Republic of Udmurt, Russia, on Friday, November 20, 2020.
Andrey Rudakov | Bloomberg | Getty Images
OPEC and its non-OPEC allies, an alliance sometimes known as OPEC +, cut oil production by a record amount in 2020 in an effort to support oil prices, as stringent public health measures around the world coincided with a fuel demand shock.
OPEC + initially agreed to cut production by 9.7 million barrels a day, before cutting cuts to 7.7 million and eventually reducing it further to 7.2 million from January. OPEC’s de facto leader, Saudi Arabia, has since said it plans to cut production by an extra 1 million barrels a day in February and March to prevent inventories from rising.
Last week, OPEC kept its 2021 forecast for world oil demand unchanged. The group of 13 members anticipated that demand growth would increase by 5.9 million barrels per day year on year, to an average of 95.9 million.