- The worst of the oil market downturn from the coronavirus pandemic has passed, according to the International Energy Agency.
- That outlook comes despite a resurgence in coronavirus cases and a massive crude oil inventory build-up.
- The IEA said reimpositions of lockdowns in North and Latin America have been “casting a shadow” over its outlook for the second half of 2020, when it expects global oil demand to be down by only 5.1 million barrels a day.
- The oil market has made some headway since “Black April,” when prices turned negative for the first time.
- Visit Business Insider’s homepage for more stories.
Global oil demand tumbled by 10.75 million barrels a day in the first six months of the year, and is expected to decline by half that number at 5.1 million barrels a day in the remainder of the year, compared to last year, the agency said.
But a resurgence of new coronavirus cases is clouding its prediction.
“The strong growth of new Covid-19 cases that has seen the re-imposition of lockdowns in some regions, including North and Latin America, is casting a shadow over the outlook,” IEA said in a statement.
The agency highlighted that the oil market has progressed since what it called “Black April” – when oil prices turned negative for the first time in history.
Recently, oil prices have been trading in a narrow bracket after new virus case counts signalled a potential aftershock for the commodity market.
GOLDMAN SACHS: Wall Street is bracing for a historically wild stock market as the presidential election nears. Here’s a surprising yet simple strategy for protecting your portfolio – regardless of outcome.
US crude inventories leaped by 1.75 million barrels to 545 million barrels in mid-June, according to a report by the American Petroleum Institute.
The inventory build-up floods the market with unwanted oil as demand continues to remain much below pre-virus levels.
The IEA said global oil production fell sharply in June to 13.7 million barrels a day, lower than its April level when the Organisation of Petroleum Exporting Countries and its allies agreed to cut supply drastically.
Compliance rate with the OPEC+ supply agreement was 108%, IEA’s report said, with Saudi Arabia’s “overperformance” in cutting production by an additional 1 million barrels.
That sent OPEC’s output to its lowest in three decades.
In the second half of 2020, IEA expects supply to grow, US production to bottom out, and OPEC+ countries to ease existing cuts by around 2 million barrels a day from August.
Libya’s oil production may rise by almost a million barrels higher than current levels, the agency said.
Ed Hyman was named Wall Street’s best economist 39 times and called the tech bubble. He outlines 3 market drivers that are aligning for investors looking to capitalise on coronavirus chaos.
Business Insider Emails & Alerts
Site highlights each day to your inbox.