IEA cuts oil forecast on low jet fuel demand

The International Energy Agency cut its forecast for oil demand in 2020 citing low requirements for jet fuel and persistently high cases of Covid-19.

The IEA said it expected annual global demand to fall by 8.1m barrels per day (bpd) to 91.9m bpd. The agency reduced its 2020 outlook by 140,000 bpd, its first downgrade in several months.

In April the number of aviation kilometres travelled fell almost 80% and in July the deficit was still 67%, the IEA said. Aviation demand for oil will be 39% lower in 2020, it predicted in its August report.

"Jet fuel demand remains the major source of weakness," the IEA said, adding that there were few signs that the situation would improve significantly soon.

New Covid-19 cases have risen globally since May and appear to have stabilised at about 280,000 a day, the highest rate since early in the pandemic, the IEA said. The increase has made the IEA cautious about the outlook for road transport fuels.

"In many countries, social distancing measures are being re-introduced along with some localised lockdowns," the IEA said. "It remains to be seen if the increase in cases heralds a second wave or it is merely a regular fluctuation that we will see over time. Recent mobility data suggest the recovery has plateaued in many regions, although Europe, for now, remains on an upward trend."

Oil markets require a "delicate rebalancing," the IEA warned. because of uncertainty over future demand and higher output by leading producers.