IEA cuts its forecast for global oil demand as air travel suffers more than expected from the ongoing virus crisis
- 2020 global oil demand cut from 92.1 mil bpd to 91.9 mil bpd
- 2021 global oil demand cut from 97.4 mil bpd to 97.1 mil bpd
- Says global oil supply to fall by 7.1 mil bpd in 2020
- Says global oil supply to rise by 1.6 mil bpd in 2021
The agency reduces oil demand estimates for almost every quarter through the end of 2021, with 2H 2020 seeing the steepest downgrades.
Adding that this is due to air travel suffering, being two-thirds lower than last year in July - a peak month due to the summer holiday, according to the agency's estimates.
The outlook for jet fuel demand has worsened in recent weeks as the coronavirus has spread more widely. It remains unclear if the new coronavirus cases herald a second wave or are simply a regular fluctuation...Demand uncertainty, possibility of higher output renders market re-balancing delicate.
That said, they do note that the compensation for earlier OPEC+ over-production could help to keep world supply steady this month.
But the key takeaway for oil in the bigger picture is that as long as the world doesn't get back to normal any time soon, it increases the risks of the market staying oversupplied.
