The International Energy Agency (IEA) has cut its forecast for 2020 oil demand growth, citing weakening market sentiment and a surge in the number of coronavirus cases worldwide.
The IEA trimmed its outlook for worldwide oil demand growth to 91.7 million barrels per day (bpd). That marks a contraction of 8.4 million bpd year-over-year, more than the 8.1-million bpd contraction predicted in the Paris-based agency’s previous report.
"We expect the recovery in oil demand to decelerate markedly in the second half of 2020, with most of the easy gains already achieved," the IEA said in its report. "The economic slowdown will take months to reverse completely, while certain sectors such as aviation are unlikely to return to their pre-pandemic levels of consumption even next year."
In addition, the IEA said there is the potential that a second wave of coronavirus cases — a scenario already feared in Europe — could cut mobility again. International benchmark Brent crude traded at $39.99 a barrel on Tuesday morning, up around 0.9%, while U.S. West Texas Intermediate crude (WTI) stood at $37.62, about 1% higher. Oil prices have dropped 40% since the start of this year.
Looking ahead, the IEA said it expects worldwide oil demand to grow by around 5.5 million bpd next year, climbing to an average of 97.1 million bpd in 2021.
