The agency has lowered its forecast for oil demand increase in 2021 by 300,000 barrels per day to 5.5 million barrels per day. The agency has also lowered its oil demand forecast for the first quarter of the calendar year by 600,000 barrels per day.
“It will take more time for oil demand to recover fully as renewed lockdowns in a number of countries weigh on fuel sales,” the agency said.
The agency sees overall demand for oil at 96.6 million barrels per day in 2021 as against 8.8 million barrel per day decline in demand seen in 2020. “A widespread vaccination effort and an acceleration in economic activity is expected to spur stronger growth in the second half of the year,” the agency said.
IEA expects supply of oil to rise in 2021 on the back of improving demand fundamental but it sees the rise being led by members of the Organization of Petroleum Exporting Countries instead of those outside the cartel.
IEA expects global oil supply to rise by 1 million barrels per day in 2021 after it declined by a record 6.6 million barrels per day in 2020 largely because of closure of oil rigs in the US and supply cuts by OPEC members.
There may be scope for higher growth given our expectations for further improvement in demand in July-December, the agency said.
IEA also expects global refinery throughput to rise by 4.5 million barrels per day in 2021 as against a 7.3 million barrels per day decline seen in 2020. “A cold snap in Europe and Asia boosted diesel and kerosene, but higher crude oil prices led fuel oil cracks lower, with an overall negative impact on refinery margins,” the IEA said.
Despite rising Covid-19 cases, crude prices are well supported by financial, economic and market fundamentals, the agency said.