The IEA expects global oil demand to recover more slowly in early 2021, before staging a stronger comeback in the second half this year
Alexander Shcherbak\TASS via Getty Images
- The IEA expects global oil demand to recover slower than expected in early 2021.
- Global consumption is expected to stage a stronger comeback later in the year, the agency said.
- Lockdowns in countries around the world are weakening the pace of higher oil demand.
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A resurgence in coronavirus cases is slowing chances of a rebound in global oil demand for 2021, according to the International Energy Agency.
Global consumption is now expected to recover by 5.5 million barrels per day to 96.6 million barrels per day in 2021, the IEA said in its monthly market report on Tuesday. “This recovery mainly reflects the impact of fiscal and monetary support packages as well as the effectiveness of steps to resolve the pandemic,” the report said.
The agency’s latest projection is lower than its previous demand growth estimate of 5.7 million barrels per day. But the IEA forecasts stronger oil demand for the second half of the year, as widespread vaccinations begin to spur economic activity.
“But it will take more time for oil demand to recover fully, as renewed lockdowns in a number of countries weigh on fuel sales,” the agency said.
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The Paris-based group, which advises the world’s largest economies on energy-related matters, expects higher demand to allow world oil supply to rise by 1.2 million barrels per day this year, following a record decline of 6.6 million barrels per day in 2020.
“The global vaccine roll-out is putting fundamentals on a stronger trajectory for the year, with both supply and demand shifting back into growth mode following 2020’s unprecedented collapse,” the IEA said.
The Organization of Petroleum Exporting Countries and its allies had delayed a further easing of output cuts in January, based on expectations for weaker oil demand. The IEA expects global oil stocks to fall by 1.1 million barrels per day in the first quarter of 2021, assuming OPEC+ is fully compliant with the latest agreement of increasing production by only 500,000 barrels a day.
Oil prices rose slightly on Tuesday, with Brent crude futures up 0.8%, to $55.22, and West Texas Intermediate up 0.1%, at $52.48. Both contracts have recovered most of the losses induced by the early stages of the pandemic in spring last year.
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