Sat, 27 Feb 2021

Surge in Covid-19 cases slowing rebound in oil market

Khalid Umar Malik
23 Jan 2021, 05:10 GMT+10

PARIS, France - The International Energy Agency (IEA) reduced its 2021 global oil forecast this week as fresh coronavirus lockdowns hover the scene but said mass vaccination programs should bolster a second-half rebound.

"The world oil demand is expected to recover by 5.5 million barrels per day (mbd) to 96.6 mbd in 2021, following an unprecedented fall of 8.8 mbd in 2020," the IEA said in its latest monthly report.

"For now, a surge in Covid-19 cases is slowing the rebound, but a widespread vaccination endeavor and an accelerated economic activity is expected to prompt stronger growth in the second half of the year."

"This recovery largely shows the impact of fiscal support packages as well as the efficacy of steps to resolve the pandemic," the report said.

The IEA is now expecting demand in the first quarter of the current year to be 0.6 mbd less than previously predicted, with the full-year outcome revised down by 0.3 mbd.

On the supply side, the IEA report said that after "falling by a record 6.6 mbd in 2020, world oil supply is set to rise by over 1.0 mbd this year."

"There may be scope for higher growth given our expectations for further improvement in demand," the IEA added.

In recent weeks, oil prices have risen on hopes the global economy will get back on track later this year.

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