Iea Says The Second Wave Of Covid-19 Can Decrease The Global Oil Demand Again

A second emerging wave of highly-contagious Covid-19 virus is slowing global oil demand after a timid recovery over the summer period when lockdowns were ending and people began travelling for holidays in the northern hemisphere, the International Energy Agency (IEA) said on Wednesday. 

In its monthly Oil Market Report (OMR), the agency indicated that oil demand worldwide had risen 3.4 million barrels per day (mbd) from June to July as restrictions on movement and activity were lifted in many areas. But this upward trend is gradually being reversed because of a resurgence of Covid-19 and the decision by governments to clamp down on several activities, thus slowing economies. 

The IEA remarked that a second wave of Covid-19 cases and new movement restrictions are now slowing demand growth. It was also noted that increased demand from the summer period is likely to be wiped out for 2020. The situation is still volatile and more restrictions that could curb demand may be put in place and can cause more severe drops. “Our 2020 forecast is unchanged at 91.7 mbd, down 8.4 mbd from 2019,” the Paris-based IEA indicated in its report. 

2021 forecast is also largely unchanged at 97.2 mbd, showing a gain of 5.5 mbd from 2020. At the same time, the global oil supply fell 600,000 bd to 91.1 mbd in September, 8.7 mbd lower than in the same month a year earlier. The IEA also noted that the UAE had sharply reduced output and maintenance had cut back supply in the North Sea and Brazil, which more than offset a US rebound from August’s Hurricane disruption.

The OMR projected that world oil supply could move close to 92 mbd in the fourth quarter from an average of 91.3 mbd in the third quarter if Libyan production continues to increase and OPEC maintains targets. Total non-OPEC supply is set to drop by 2.6 mbd in 2020 before recovering by 0.4 mbd in 2021, the report said. The IEA also noted that the refinery sector was witnessing “one of their worst quarters” ever because of steep falls in margins in the third quarter.

 

Source: Timeskuwait

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