A worker holds a fuel pump nozzle at a gas station in Shah Alam, Malaysia, on Tuesday, January 12, 2021.
Samsul Said | Bloomberg | Getty Images
LONDON – The International Energy Agency on Tuesday reduced its forecast for global oil demand in 2021, citing growing cases of Covid-19 and renewed blockade measures that will further limit mobility.
The IEA said it now expects global oil demand to recover 5.5 million barrels a day, to 96.6 million this year. This reflects a downward revision of 0.3 million barrels from last month’s assessment and follows an unprecedented collapse of 8.8 million barrels per day last year as the coronavirus pandemic hit global oil markets.
The latest IEA oil market report comes as countries continue to implement strict public health measures in an attempt to reduce the spread of the virus, with blockages imposed in Europe and parts of China.
The Paris-based energy agency said growth in oil demand is expected to decline slightly in the first three months of the year as a result of tougher government plans that require additional travel restrictions.
It is expected to reduce global mobility again, leading the IEA to reduce its first-quarter forecast for rising oil demand to 94.1 million barrels per day. In this regard, oil demand will return to levels of almost a year ago and reflects a downward revision of 0.6 million barrels in the December oil market report.
“The global launch of vaccines puts the fundamentals on a stronger trajectory for that year, with both demand and supply returning to growth after the unprecedented collapse of 2020,” the AIE said in its closely monitored report.
“But it will take longer for oil demand to fully recover, as renewed blockades in several countries are affecting fuel sales,” she added.
Oil prices
Oil prices have risen in recent weeks, supported by optimism about the launch of the Covid vaccine and the surprise reduction in OPEC Saudi Arabia’s oil production.
However, the relatively slow pace of inoculations has raised doubts about how quickly savings can be recovered.
On the big morning, brent Brent international futures traded at $ 55.26 a barrel, up more than 0.9%, while US futures in West Texas Intermediate stood at 52, $ 51, about 0.3% higher.
Both benchmarks fell by more than 2.2% in the previous session, recording their weakest daily performance since December 21st.
Oil pumping jacks, also known as “donkeys in the head”, in a Rosneft Oil Co. oil field. near the village of Sokolovka in the Republic of Udmurt, Russia, on Friday, November 20, 2020.
Andrey Rudakov | Bloomberg | Getty Images
OPEC and its non-OPEC allies, an alliance sometimes called OPEC +, cut oil production by a record amount in 2020 in an effort to boost oil prices as strict global public health measures coincided with a fuel demand shock.
OPEC + initially agreed to reduce production by 9.7 million barrels per day, before reducing the cuts to 7.7 million and finally to 7.2 million in January. The de facto leader of OPEC, Saudi Arabia, has since said it plans to cut production by another 1 million barrels a day in February and March to stop stockpiling.
Last week, OPEC kept its 2021 forecast for world oil demand unchanged. The 13-member group anticipated an increase in demand to increase by 5.9 million barrels per day per year, to an average of 95.9 million.