IEA Lowers 2020 Oil Demand Forecast; Cites Weak Aviation Sector

Andrew Cummings
August 14, 2020

Getty Images Prices had been bolstered this week by USA government data showing crude oil, gasoline and distillate inventories falling last week as refiners ramped up production and demand for oil products rose.

Brent crude oil prices were up on Friday as the economy of the world's largest oil consumer United States recorded the lowest jobless claims since the coronavirus pandemic hit the country.

No-one can be sure, leading both the International Energy Agency and the Organisation of the Petroleum Exporting Countries to trim forecasts for the rest of the year, in their monthly oil reports.

"Pessimism about this year's oil demand growth prospects is due to the weakening outlook in the coming months", said Stephen Brennock of oil broker PVM.

The company, which highlighted that Venezuela is the country with the world's largest oil reserves, said a restoration of production "somewhere in the future" is always a possibility, but added that the state of Venezuela's infrastructure, ongoing US sanctions and lower global demand make it "increasingly unlikely".

The main reason for the decline was caused by the weak demand from the world, and which also encouraged the crude oil price on the Brent Crude to decrease with US$0.47/barrel on the same day, came to US$44.96/barrel.

American benchmark West Texas Intermediate was at $42.38 per barrel at the same time, up 0.33% after ending the previous session at $42.24 a barrel.

U.S. crude oil, gasoline and distillate inventories fell last week as crude production dropped sharply and refiners ramped up production, the Energy Information Administration said on Wednesday.

"We're seeing the demand bounce back", said Phil Flynn, senior energy analyst at Price Futures Group.

Damage to demand wrought by less cross-border travel was mitigated somewhat by recovery in industry and e-commerce that was supporting trucking, but the IEA still predicted 2021 oil consumption would be slightly lower than in 2019.

The number of cases rose to 48 in New Zealand, after 102 days of no cases in the country.

OPEC and allies including Russian Federation, collectively called OPEC+, cut output since May by around 10 per cent of typical global demand to tackle the fallout from the global health crisis.

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