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The IEA is cutting demand for 2020 amid rising coronavirus cases

Oil field workers with Wisco work on a pump jack in North Dakota, USA on November 6, 2013.

Ken Cedeno | Corbis News | Getty Images

LONDON – The International Energy Agency cut its forecast for 2020 oil demand growth on Tuesday, citing a “treacherous” path amid weaker market sentiment and a surge in coronavirus cases reported around the world.

In a closely watched monthly report, the IEA has lowered its prospect for world oil demand growth to 91

.7 million barrels a day. This corresponds to a decrease of 8.4 million bpd compared to the previous year, more than the decrease of 8.1 million bpd forecast in the August report of the Paris-based energy agency.

“We expect the recovery in oil demand to slow significantly in the second half of 2020, with most of the slight gains already being made,” the IEA said.

“It will be months before the economic slowdown is fully reversed, while certain sectors like aviation are unlikely to return to pre-pandemic consumption levels next year.”

In addition, the IEA said there is potential for a “second wave” of coronavirus cases – a scenario already feared in Europe – to affect mobility again, “albeit probably less than in March-May when many governments lockdown measures have taken “.

The international benchmark Brent crude was trading at $ 39.99 a barrel on Tuesday morning, up around 0.9%, while US West Texas Intermediate (WTI) crude oil was trading at $ 37.62, around $ 1 % higher.

Oil prices have fallen by around 40% since the beginning of the year.

Again weakness

Coming soon after OPEC cut its forecast for oil demand growth in 2020, the report cites a weaker than expected recovery in India and other Asian countries. The oil exploration group also warned Monday that risks would remain “elevated and downward” for the first half of 2021.

The IEA reiterated that assessment on Tuesday, saying that “renewed weakness” in India was a cause for concern. However, China, which emerged from the lockdown earlier than other major economies, continued to rebound “strongly,” the group said.

Energy market participants are increasingly concerned about a stalled economic recovery and stumbling fuel demand as a result of the coronavirus pandemic.

The global health crisis coincided this year with an unprecedented shock in energy demand. The IEA previously warned that the decline in oil demand growth in 2020 could be the largest in history.

Looking ahead, the IEA anticipated a global increase in global oil demand of around 5.5 million bpd next year and an average of 97.1 million bpd in 2021.

To date, more than 29.2 million people worldwide have been infected with Covid-19, with 928,576 deaths, according to data from Johns Hopkins University.

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