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Oil demand is recovering from the greatest fall in its history in 2020, the International Energy Agency (IEA) said on Tuesday, but less flying due to coronavirus fears means the world will not return to pre-pandemic demand levels before 2022.
“Our first forecast for 2021 as a whole shows demand growing by 5.7 million barrels per day (bpd), which, at 97.4 million bpd, will be 2.4 million bpd below the 2019 level,” the IEA said in its monthly report.
“Reduced jet and kerosene deliveries will impact total oil demand until at least 2022… the aviation industry is facing an existential crisis,” the Paris-based IEA said.
The IEA raised its forecast for 2020 oil demand by nearly 500,000 bpd due to stronger than expected imports in Asia.
“China’s strong exit from lockdown measures has seen demand in April almost back to year-ago levels. We have also seen a strong rebound in India in May, although demand is still well below year-ago levels.”
Citing a plunge in global oil supply by 11.8 million bpd in May, the IEA said the Organization of the Petroleum Exporting Countries and its allies including Russia – a grouping known as OPEC+ – had reduced their output by 9.4 million bpd.
“If recent trends in production are maintained and demand does recover, the market will be on a more stable footing by the end of the second half,” the IEA said.
“However we should not underestimate the enormous uncertainties.”
Oil prices gain
Oil prices made marginal gains on Tuesday, reversing out of earlier losses, as hopes for further cuts in crude supplies took the sting out of concerns that a resurgence of new coronavirus infections around the world could hamper fuel demand.
Brent crude edged up by nine cents, or 0.2 percent, at 39.81 U.S. dollars a barrel by 0659 GMT, having gained by 2.6 percent on Monday. U.S. oil gained by three cents, or nearly 0.1 percent, to 37.15 U.S. dollars a barrel, after closing 2.4 percent higher in the previous session.
