The International Energy Agency said it expects worldwide oil demand to grow by around 5.5m barrels per day to an average of 97.1mbpd in 2021.
IEA stated this on Tuesday in a closely-watched monthly report, while cutting its forecast for 2020 oil demand growth to 91.7mbpd.
The contraction marked 8.4mbpd year-on-year reduction, more than the 8.1mbpd drop predicted in the Paris-based energy agency’s August report.
“We expect the recovery in oil demand to decelerate markedly in the second half of 2020, with most of the easy gains already achieved.
“The economic slowdown will take months to reverse completely, while certain sectors such as aviation are unlikely to return to their pre-pandemic levels of consumption even next year,” the IEA stated.
Commenting on the report, Head of Oil Industry and Markets Division at IEA, Neil Atkinson, said, “I think the main message that we put across in the report is that sentiment seems to be weakening.
“We have seen oil prices very range-bound since roughly the middle to the later part of June, between $40 and $45 a barrel for Brent. But, just recently, we have seen $40 a barrel tested and it does look as if the rebound in recovery is beginning to stall.”
Atkinson said further that the upsurge of Coronavirus Disease cases across Europe, in particular, reflected a cause for concern, adding, “It does look as if we are not out of the woods yet.”
The IEA report came shortly after Organisation of the Petroleum Exporting Countries cut its forecast for oil demand growth in 2020, citing a weaker-than-expected recovery in India and other Asian countries.
The oil-producing group, on Monday, also warned that risks would remain “elevated and skewed to the downside” for the first half of 2021.
IEA echoed similar sentiment saying “renewed weakness” in India reflected a cause for concern.
The group, however, said China, which emerged from lockdown sooner than other major economies, continued to recover strongly.
Oil prices have dropped around 40 per cent since the start of the year.
And on Tuesday morning, international benchmark Brent crude traded at $40.21bpd, up around 1.5 per cent, while U.S. West Texas intermediate crude stood at $37.90, roughly 1.7 per cent higher.
