Global oil demand is unlikely to get a significant boost from the roll-out of Covid-19 vaccines until the second half of 2021, according to the International Energy Agency (IEA).
“It is far too early to know how and when vaccines will allow normal life to resume. For now, our forecasts do not anticipate a significant impact in the first half of 2021,” the Paris-based IEA said in its monthly report. “The poor outlook for demand and rising production in some countries … suggest that the current fundamentals are too weak to offer firm support to prices.”
The pessimistic outlook sent Brent crude down 0.8% to $43.46 U.S. a barrel in early London trade, snapping three straight days of gains.
While noting that countries in the Organization for Economic Cooperation and Development (OECD) had modestly drawn down their crude oil stocks for two months in a row by September, the IEA said that storage levels were still not far from peaks in May at the height of the pandemic.
The IEA also cited a resurgence of Covid-19 infections in Europe and the United States and renewed lockdown measures for revising down its outlook for global oil demand for 2020 by 400,000 barrels per day (bpd) compared with its last estimate.
Plans by the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia to boost output by two million barrels per day from January would mean supply would outweigh demand, the IEA warned.
The IEA did revise up its prediction for demand growth in 2021, which will still represent a drop of three million barrels per day below pre-pandemic levels in 2019.