The International Energy Agency (IEA) on Thursday cut its 2020 global oil demand forecast, citing a resurgence of the Covid-19 pandemic, with vaccines unlikely to have much of an impact until well into next year.
The IEA said that as a result of fresh restrictions imposed by governments in an effort to curb the disease, it expected full-year 2020 global oil demand to come in at 91.3 million barrels per day (mbpd) — down by 8.8 mbpd compared with the drop of 8.4 mbpd given in last month’s regular report.
The rebound next year will be slightly better, however, with an increase of 5.8 mbpd, up from last month’s 5.5 mbpd.
“Vaccines are unlikely to significantly boost demand until well into next year,” the IEA cautioned.
It noted that reports of progress in the search for a vaccine had caused “considerable excitement,” giving oil prices — and the financial markets generally — a massive boost.
“However, it is far too early to know how and when vaccines will allow normal life to resume. For now, our forecasts do not anticipate a significant impact in the first half of 2021,” it said.
“In the here and now we continue to see surging caseloads, particularly in Europe and the United States,” it added.
The IEA, set up by the developed economies after the oil price and supply shocks of the early 1970s, said oil output rose slightly to 91.2 mbpd in October as OPEC and major non-OPEC countries stuck by a deal to cut production.
“Production from countries participating in the OPEC+ agreement held largely steady,” it noted.
On Wednesday, OPEC itself revised down its forecasts for global oil demand this year and next due to the economic disruption caused by the coronavirus pandemic.
OPEC expects global demand for crude oil to decline by 9.8 mbpd in 2020, compared with its previous forecast for a drop of 9.5 mbpd.
For 2021, OPEC expected a rebound of 6.2 mbpd but this represented a cut of 300,000 bpd on its previous estimate, leaving global demand at 96.3 mbpd.
Under the terms of the deal between OPEC and non-cartel producers, principally Russia agreed in April, the so-called OPEC+ group pledged to cut output by 9.7 mbpd from May 1 until the end of June.
The cuts were then to be gradually eased from July, to 7.7 mbpd through to December and then 5.8 mbpd from January.