IEA lowers global oil demand forecast for 2021, sees rising supply

MUMBAI: The International Energy Agency has downgraded its forecast for global oil demand following increased COVID-19 restrictions in Europe and North America, but expects that demand increases in the second half of 2021.

The agency lowered its forecast for oil demand growth in 2021 from 300,000 barrels per day to 5.5 million barrels per day. The agency also lowered its oil demand forecast for the first quarter of the calendar year by 600,000 barrels per day.

“It will take longer for oil demand to fully recover as further lockdowns in a number of countries weigh on fuel sales,” the agency said.

The agency forecasts aggregate oil demand at 96.6 million barrels per day in 2021, compared to a decline in demand of 8.8 million barrels per day seen in 2020. “A widespread vaccination effort and an acceleration of economic activity should drive stronger growth in the second half. of the year,” the agency said.

The IEA expects oil supply to increase in 2021 thanks to the fundamental improvement in demand, but it sees the rise being driven by members of the Organization of the Petroleum Exporting Countries rather than by those who are not part of the cartel.

The IEA expects global oil supply to increase by 1 million barrels per day in 2021 after shrinking by a record 6.6 million barrels per day in 2020, largely due to the shutdown of oil rigs in the United States and supply cuts by OPEC members.

There could be room for higher growth given our expectations for further improvement in demand in July-December, the agency said.

The IEA also expects global refinery throughput to increase by 4.5 million barrels per day in 2021, compared with a decline of 7.3 million barrels per day seen in 2020. overall negative impact on refining margins,” the IEA said.

Despite the rise in Covid-19 cases, crude prices are well supported by financial, economic and market fundamentals, the agency said.


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Felix J. Dixon