The global economy is likely not headed for any major slowdown due to Covid-19 but piled-up storage and uncertainty over China’s oil demand cloud oil markets’ recovery, an official with the International Energy Agency (IEA) said.
Keisuke Sadamori, IEA Director for Energy Markets and Security, told Reuters the outlook for oil was in the midst of either a second wave or a steady first wave of the coronavirus.
“There is enormous amount of uncertainty, but we don’t expect any additional serious slowdown in the coming months.” “Even though (the market is) not expecting real robust growth coming back soon, the view on demand is more stable compared with three months ago,” he said in an interview.
Crude prices LCOc1 and CLc1 plunged in spring to historic lows as the pandemic’s lockdowns crushed demand and have pared losses but remained stuck near $40 a barrel.
The IEA cut its 2020 oil demand forecast in its monthly report on August 13, warning that reduced air travel would lower global oil demand by 8.1 million barrels per day (bpd). The Paris-based agency downgraded its outlook for the first time in three months, as the epidemic continues to wreak economic pain and job losses worldwide. With Brent crude registering its first weekly loss since June on Friday, markets have grown increasingly nervous over demand, poor refining margins and slow economic growth, reducing incentives to draw crude and products from abundant stocks.
“We are not seeing a robust pickup in refining activity, and jet fuel is the big problem,” he added.
China, the world’s largest crude importer, emerged from an economic lockdown sooner than other major economies and used its financial muscle to make record oil imports in recent months, a rare bright spot amid global demand destruction.