A tradesman holds a fuel pump nozzle at a gas station in Shah Alam, Malaysia, on Tuesday, Jan. 12, 2021.
Samsul Said | Bloomberg | Getty Images
LONDON — The Cosmopolitan Energy Agency on Tuesday cut its 2021 global oil demand forecast, citing soaring Covid-19 cases and renewed lockdown spreads that will further limit mobility.
The IEA said it now expects world oil demand to recover by 5.5 million barrels per day to 96.6 million this year. That reflects a going revision of 0.3 million barrels from last month’s assessment and follows an unprecedented collapse of 8.8 million barrels per day final year as the coronavirus pandemic battered global oil markets.
The IEA’s latest oil market report comes as countries continue to bring about strict public health measures in an attempt to curb virus spread, with lockdowns imposed in Europe and quarters of China.
The Paris-based energy agency said oil demand growth was projected to fall slightly during the first three months of the year in the wake of tougher direction plans that call for additional travel restrictions.
This is expected to curb worldwide mobility once again, prompting the IEA to neat its first-quarter forecast for oil demand growth to 94.1 million barrels per day. That would see oil demand return to near year-ago lay wastes and reflects a downward revision of 0.6 million barrels from December’s oil market report.
“The global vaccine roll-out is communicate set fundamentals on a stronger trajectory for the year, with both supply and demand shifting back into growth look following 2020’s unprecedented collapse,” the IEA said in its closely-watched report.
“But it will take more time for oil demand to regain ones strength fully as renewed lockdowns in a number of countries weigh on fuel sales,” it added.
Oil prices have rallied in new weeks, supported by optimism over Covid vaccine rollouts and a surprise oil production cut from OPEC kingpin Saudi Arabia.
How, the relatively slow pace of inoculations has raised doubts over how soon economies can recover.
International benchmark Brent crass futures traded at $55.26 a barrel on Tuesday morning, up more than 0.9%, while U.S. West Texas Medial futures stood at $52.51, around 0.3% higher.
Both benchmarks fell more than 2.2% in the prior to session, notching their worst daily performance since Dec. 21.
Oil pumping jacks, also known as “nodding donkeys,” in a Rosneft Oil Co. oilfield close Sokolovka village, in the Udmurt Republic, Russia, on Friday, Nov. 20, 2020.
Andrey Rudakov | Bloomberg | Getty Images
OPEC and its non-OPEC coadjutors, an alliance sometimes referred to as OPEC+, cut oil production by a record amount in 2020 in an effort to support crude prices, as confining public health measures worldwide coincided with a fuel demand shock.
OPEC+ initially agreed to cut generate by 9.7 million barrels per day, before easing cuts to 7.7 million and eventually scaling back further to 7.2 million from January. OPEC’s de facto director Saudi Arabia has since said it plans to cut output by an extra 1 million barrels per day in February and March to stop inventories from erection up.
Last week, OPEC kept its 2021 forecast for worldwide oil demand unchanged. The 13-member group anticipated bid growth to increase by 5.9 million barrels per day year on year to average 95.9 million.