Demand for transportation fuel remains weak amid a still-raging global pandemic, forcing downward revisions to oil consumption for 2020 and next year.
The International Energy Agency (IEA) said Tuesday in its Oil Markets Report for December that it lowered its demand estimate for this year by 50,000 b/d and its projection for next year by 170,000 b/d.
Citing pandemic-induced travel restrictions that continue to curb demand for jet fuel and gasoline in Europe and the United States, the Paris-based watchdog said 2020 oil demand would fall 8.8 million b/d when compared to 2019, to 91.2 million b/d, while 2021 consumption would increase by an estimated 5.7 million b/d.
IEA researchers said coronavirus vaccines that hit the market this month – and more are expected early next year – provide upside to both economic growth and fuel demand in 2021, though the recovery is expected to prove gradual over the first half of the year. A full rebound is dependent on widespread inoculation bringing an end to the pandemic.
It “will be several months before we reach a critical mass of vaccinated, economically active people and thus see an impact on oil demand,” IEA researchers said. “In the meantime, the end-of-year holiday season will soon be upon us with the risk of another surge in Covid-19 cases and the possibility of yet more confinement measures.”
The Organization of the Petroleum Exporting Countries this week also lowered its 2021 global oil demand forecast. In its Monthly Oil Market Report released Monday, the cartel said it now expects consumption will rise by 5.9 million b/d to 95.89 million b/d in 2021. In November, it predicted demand would grow by 6.25 million b/d. Last month’s outlook reflected a 300,000 b/d drop from a previous forecast.
OPEC expects oil demand to decline by 9.77 million b/d to 89.99 million b/d this year. It cited the festering impacts of the coronavirus pandemic on transportation fuel demand for the lowered 2021 outlook and the 2020 decline.
The pandemic “and accompanying lockdown measures have had an unprecedented impact on world oil demand,” OPEC researchers said, “with the latest data pointing to a historic contraction” in 2020.
“Uncertainties remain high,” they added, noting the likelihood of more virus outbreaks this winter and the unknown pace of vaccine rollouts, as well as the potential for long-term changes to consumer behaviors, “predominantly in the transportation sector.”
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