IEA increases 2020 oil demand forecast but maintains Covid-19 concerns

The International Energy Agency (IEA) raised its 2020 oil demand forecast on Friday but warned the spread of Covid-19 was still a concern and could change the outlook.

The IEA raised its forecast to 92.1m barrels per day (bpd), up 400,000 bpd from its outlook in June, citing a smaller-than-expected second-quarter decline.

Global oil supply dropped to a nine-year low of 86.9m barrels a day last month as OPEC+ delivered everything it had promised.

The collapse in fuel consumption during the second quarter was slightly less severe than previously estimated as lockdowns around the world were eased, and demand should pick up in the next three months as economic activity resumes.

“While the oil market has undoubtedly made progress ... the large, and in some countries, accelerating number of Covid-19 cases is a disturbing reminder that the pandemic is not under control and the risk to our market outlook is almost certainly to the downside,” the IEA said in its monthly report.

Oil refining activity in 2020 is set to fall by more than the IEA anticipated last month and to grow less in 2021, it said in the report.

“For refiners, any benefit from improving demand is likely to be offset by expectations of much tighter feedstock markets ahead. Refining margins will also be challenged by a major product stocks overhang from the very weak second quarter of 2020,” the IEA said.