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India saw biggest m-o-m fall in oil demand in Aug; global recovery will be slow: IEA

The IEA has cut its 2020 oil demand forecast by 200,000 barrels per day (bpd) to 91.7 bpd in its second downgrade

The IEA has cut its 2020 oil demand forecast by 200,000 barrels per day (bpd) to 91.7 bpd in its second downgrade.
  • For 2020 as a whole, we see the fall in demand versus 2019 at 8.4 mb/d, slightly deeper than last month, said IEA

  • It also said that India has seen a continued upsurge in Covid-19 cases, contributing in August to the biggest month-on-month fall of oil demand there since April

New Delhi: While noting the resurgence of Covid-19 cases in many countries, local lockdown measures, continued teleworking and the weak aviation sector, the International Energy Agency (IEA) cut its 2020 oil demand forecast by 200,000 barrels per day (bpd) to 91.7 bpd in its second downgrade on Tuesday. “In this Report, we have reduced our estimate for global demand growth in the second half of this year by 0.4 mb/d. For 2020 as a whole, we see the fall in demand versus 2019 at 8.4 mb/d, slightly deeper than last month. At 91.7 mb/d, demand has returned to its level in 2013,” said the IEA in its monthly report. 

The IEA also said that India has seen a continued upsurge in Covid-19 cases, contributing in August to the biggest month-on-month fall of oil demand there since April.

Recovery in global refining throughput to slow down from Aug to Oct: IEA

The recovery in global refining throughput is expected to slow from August to October due to the impact of hurricane shutdowns in the US Gulf and seasonal maintenance elsewhere. Chinese and Indian refinery runs fell in July and Hurricane Laura cut short the US recovery. The hurricane shutdowns resulted in only a brief spike in refinery margins, which remain depressed due to weak demand for premium transport fuels, said the report.

Also read: IEA expects India’s petroleum product demand to drop by 8% in 2020

“New data show that global demand from January to July was 10.5 million barrels per day below last year’s level. As national lockdowns eased there was an initial sharp recovery in demand led by gasoline, but the curve has flattened out and it is becoming increasingly apparent that Covid-19 will stay with us for some time,” said the IEA.

‘Outlook appears even more fragile when compared to August’

“In last month’s Report, we said that the market was in a state of “delicate re-balancing”. One month later, the outlook appears even more fragile,” said the IEA. Increasing oil output and the downgraded demand outlook also mean a slower draw on crude oil stocks which piled up at the height of lockdown measures, it added. The agency now predicts implied stock draws in the second half of the year of about 3.4 million barrels per day, nearly one million bpd less than it predicted last month, with July storage levels in developed countries again reaching record highs.

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