The International Energy Agency on Tuesday cut its 2021 global oil demand forecast. It cited the rising COVID-19 cases and renewed lockdown measures as the reason for its revision.
The IEA said in a report that it now expects world oil demand to recover by 5.5 million barrels per day to 96.6 million this year, a downward revision of 0.3 million barrels from last month’s assessment.
The report comes in the midst of new, stricter lockdowns in Europe and parts of China aimed at curbing the spread of the virus.
The IEA says worldwide demand for oil will take time to recover
“The global vaccine roll-out is putting fundamentals on a stronger trajectory for the year, with both supply and demand shifting back into growth mode following 2020’s unprecedented collapse,” the IEA said in its report.
“But it will take more time for oil demand to recover fully as renewed lockdowns in a number of countries weigh on fuel sales,” it added.
The Paris-based energy agency said oil demand growth was projected to fall slightly during the first three months of the year as a result of tougher government plans that call for additional travel restrictions.
The lockdowns will curb worldwide mobility once again. This prompted the IEA to trim its first-quarter forecast for oil demand growth.
Oil prices have increased in recent weeks
Oil prices have increased in recent weeks, supported by optimism over COVID-19 vaccine roll-outs, and a surprise oil production cut from OPEC kingpin Saudi Arabia. However, the slow pace of vaccinations has raised doubts over how soon economies can recover.
International benchmark Brent Crude futures traded at $55.26 a barrel on Tuesday morning, up more than 0.9%, while U.S. West Texas Intermediate futures stood at $52.51, around 0.3% higher.
Both benchmarks fell more than 2.2% in the previous session, notching their worst daily performance since Dec 21.