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IEA cuts 2021 oil demand outlook as new Covid lockdowns weigh on gasoline gross sales

A employee holds a gasoline pump nozzle at a gasoline station in Shah Alam, Malaysia, on Tuesday, Jan. 12, 2021.

Samsul Mentioned | Bloomberg | Getty Photos

LONDON — The Worldwide Vitality Company on Tuesday minimize its 2021 world oil demand forecast, citing hovering Covid-19 instances and renewed lockdown measures that can additional restrict mobility.

The IEA mentioned it now expects world oil demand to recuperate by 5.5 million barrels per day to 96.6 million this yr. That displays a downward revision of 0.3 million barrels from final month’s evaluation and follows an unprecedented collapse of 8.8 million barrels per day final yr because the coronavirus pandemic battered world oil markets.

The IEA’s newest oil market report comes as international locations proceed to implement strict public well being measures in an try to curb virus unfold, with lockdowns imposed in Europe and components of China.

The Paris-based vitality company mentioned oil demand progress was projected to fall barely throughout the first three months of the yr within the wake of harder authorities plans that decision for added journey restrictions.

That is anticipated to curb worldwide mobility as soon as once more, prompting the IEA to trim its first-quarter forecast for oil demand progress to 94.1 million barrels per day. That might see oil demand return to close year-ago ranges and displays a downward revision of 0.6 million barrels from December’s oil market report.

“The worldwide vaccine roll-out is placing fundamentals on a stronger trajectory for the yr, with each provide and demand shifting again into progress mode following 2020’s unprecedented collapse,” the IEA mentioned in its closely-watched report.

“However it can take extra time for oil demand to recuperate absolutely as renewed lockdowns in quite a lot of international locations weigh on gasoline gross sales,” it added.

Oil costs

Oil costs have rallied in latest weeks, supported by optimism over Covid vaccine rollouts and a shock oil manufacturing minimize from OPEC kingpin Saudi Arabia.

Nonetheless, the comparatively gradual tempo of inoculations has raised doubts over how quickly economies can recuperate.

Worldwide benchmark Brent crude futures traded at $55.26 a barrel on Tuesday morning, up greater than 0.9%, whereas U.S. West Texas Intermediate futures stood at $52.51, round 0.3% increased.

Each benchmarks fell greater than 2.2% within the earlier session, notching their worst day by day efficiency since Dec. 21.

Oil pumping jacks, also referred to as “nodding donkeys,” in a Rosneft Oil Co. oilfield close to Sokolovka village, within the Udmurt Republic, Russia, on Friday, Nov. 20, 2020.

Andrey Rudakov | Bloomberg | Getty Photos

OPEC and its non-OPEC allies, an alliance generally known as OPEC+, minimize oil manufacturing by a file quantity in 2020 in an effort to assist crude costs, as strict public well being measures worldwide coincided with a gasoline demand shock.

OPEC+ initially agreed to chop output by 9.7 million barrels per day, earlier than easing cuts to 7.7 million and ultimately scaling again additional to 7.2 million from January. OPEC’s de facto chief Saudi Arabia has since mentioned it plans to chop output by an additional 1 million barrels per day in February and March to cease inventories from build up.

Final week, OPEC stored its 2021 forecast for worldwide oil demand unchanged. The 13-member group anticipated demand progress to extend by 5.9 million barrels per day yr on yr to common 95.9 million.

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