An Eastar Jet Inc. aircraft, front and Jeju Air Co. aircraft will land on Wednesday, August 12, 2020 at the intestinal surface at Incheon International Airport in Incheon, South Korea.
SeongJoon Cho | Bloomberg via Getty Images
The International Energy Agency on Thursday lowered its global oil demand forecasts several times in several months as the number of Covid-19 infections remains high and amid persistent weakness in the aviation sector.
In a close-up vacancy, the IEA reported that it now sees global oil demand for 2020 at 91.1 million barrels per day, reflecting a fall of 8.1 million barrels per year year-on-year.
This revised forecast is 140,000 barrels per day lower than the previous IEA projection.
The agency also revised its global oil estimate in 2021 at 240,000 barrels per day to 97.1 million barrels per day, with demand for jet fuel identified as the “major source” of weakness.
The report comes shortly after the world’s largest oil and gas companies reported historic losses in the second quarter, as coronavirus fiscal measures lead to an unparalleled demand shock in energy markets.
Earlier this year, IEA Executive Director Fatih Birol told reporters that 2020 may well come to represent the worst year in the history of oil markets.
“Recent data on mobility suggest that recovery has slowed in many regions, although Europe remains ahead of an upward trend,” the IEA said in its release on Thursday.
“For road transport fuels, demand was somewhat stronger than expected in the first half of 2020, but for the second half we remain cautious and the rise in Covid-19 cases has seen us downgrade our estimates, especially for petrol.”
International benchmark Brent crude futures traded at $ 45.29 on Thursday morning, more than 0.3% lower, while US West Texas Intermediate futures stood at $ 42.52, down 0.4%.
Oil prices have fallen more than 25% from year to date.
Pandemic has cast ‘a long shadow’ over demand for oil
The coronavirus outbreak “has cast a long shadow” over oil demand, the IEA said in its oil market report.
The Paris-based energy agency said aviation and transport, both essential components of oil consumption, continued to struggle in the wake of the pandemic.
The rough air activity, measured in passenger kilometers, was down by about two-thirds from normal levels in July, typically one of the peak months for air traffic.
An Indian Petroleum Pump employee is seen with a face shield as he burns a customer’s car in an open Kolkata Petrol Retail Outlet during the Covid-19 pandemic.
Avishek Das | SOPA images | LightRocket via Getty Images
Meanwhile, data on mobility for July showed that fuel demand remained below seasonal standards in Europe and North America. Those numbers were “much lower” in regions where the virus continues to spread rapidly, the IEA said, citing Latin America and India as two examples.
The number of new daily cases of coronavirus worldwide reached its highest level since the early days of the pandemic earlier this month.
To date, more than 20.6 million people have contracted Covid-19 infection worldwide, with 749,421 related deaths, according to Johns Hopkins University data.
Oil market ‘rebalancing’ remains delicate
The IEA said global oil supply was set to fall by 7.1 million tonnes per day by 2020 and increase by 1.6 million tonnes per day next year.
It added that oil supplies rose by 2.5 million tonnes per day to reach 90 million tonnes per day in July, after OPEC kingpin Saudi Arabia ended its voluntary production spending, the United Arab Emirates exceeded its OPEC + target and US production began to recover.
“Our balances show that demand was higher in June, and for the rest of the year there is an implied stock pull,” the IEA said.
“Will continued uncertainty about demand caused by Covid-19 and the possibility of higher output means that the rebalancing of the oil market remains delicate.”
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