The Strategist

IEA becomes optimistic about oil prices in 2020

05/15/2020 - 02:48

Global demand for oil in the second quarter of this year will not sink as much as expected as countries are lifting lockdowns faster than previously thought, follows from the May forecast of the International Energy Agency (IEA). According to his experts, the reaction of oil producers to falling prices was more pronounced than it could be, which resulted in a reduction in supplies, including by countries that were not included in the OPEC + deal. The IEA consider a second outbreak of COVID-19 the main risk of the emerging stabilization of the oil market.

Against the backdrop of the gradual lifting of anti-virus restrictions, global oil demand in the second quarter of this year will not fall as much as expected in April. Nevertheless, it will still be at 19.9 million barrels per day (bpd) below the level the second quarter of last year, and will amount to 79.3 million bpd, follows from the May forecast of the IEA. Including in April, the drop in demand amounted to 25.2 million bpd against the comparable period. In May it will decrease to 21.5 million bpd, and in June - to 13 million bpd.

As a result, in general, by 2020, the IEA is now waiting for a drop in demand by 8.6 million bpd, not by 9.3 million bpd, as estimated a month earlier, to the level of 91.2 million bpd.

For comparison, earlier OPEC worsened its forecast for world oil demand and is now waiting for its reduction this year by 9.07 million bpd, to 91.1 million bpd.

The IEA consider a possible resumption of the growth of the coronavirus pandemic the main risk for the forecast. According to the agency, by the end of May 2.8 billion people in the world will be locked down; in April this number was 4 billion people.