The global economy is likely not headed for any major slowdown due to COVID-19 but piled-up storage and uncertainty over China's oil demand cloud oil markets' recovery, an official with International Energy Agency (IEA) said.
Keisuke Sadamori, IEA director for energy markets and security, told Reuters the outlook for oil was in the midst of either a second wave or a steady first wave of the coronavirus.
"There is an enormous amount of uncertainty, but we don't expect any additional serious slowdown in the coming months."
"Even though [the market is] not expecting real robust growth coming back soon, the view on demand is more stable compared with three months ago," he said in an interview.
Crude prices plunged in spring to historic lows as the pandemic's lockdowns crushed demand, and have pared losses but remained stuck near $40/bbl.
The IEA cut its 2020 oil demand forecast in its monthly report on Aug. 13, warning that reduced air travel would lower global oil demand by 8.1 million bbl/d.
The Paris-based agency downgraded its outlook for the first time in three months, as the epidemic continues to wreak economic pain and job losses worldwide.
With Brent crude registering its first weekly loss since June on Sept. 4, markets have grown increasingly nervous over demand, poor refining margins and slow economic growth, reducing incentives to draw crude and products from abundant stocks.
"It doesn't seem like a massive stock draw seems to be happening yet," Sadamori said.
"We are not seeing a robust pickup in refining activity, and jet fuel is the big problem," he added.
China, the world's largest crude importer, emerged from an economic lockdown sooner than other major economies and used its financial muscle to make record oil imports in recent months, a rare bright spot amid global demand destruction.
But geopolitical tensions could call into doubt "to what extent it can be sustainable and last long," Sadamori said.
"There are so many uncertainties with regard to the Chinese economy and their relationship with key industrialized countries, with the U.S. and these days, even Europe. It's not such an optimistic situation—that casts some shadow over the growth outlook."
Recommended Reading
Winded: Ørsted Books More Impairments, Delays US Offshore Project
2024-08-15 - Danish offshore wind developer Ørsted booked about $574 million in impairments and scrapped a green fuels project in Europe.
Algonquin Reaches $2.5B Deal to Sell Non-hydro Renewables Business
2024-08-12 - Algonquin’s transaction with LS Power is expected to close in fourth-quarter 2024 or first-quarter 2025, the company says.
Energy Transition in Motion (Week of July 12, 2024)
2024-07-12 - Here is a look at some of this week’s renewable energy news.
Energy Transition in Motion (Week of Aug. 2, 2024)
2024-08-02 - Here is a look at some of this week’s renewable energy news, including an update on one of the largest offshore wind projects being developed in the U.S.
Equinor, Dominion Place Winning Bids in US Offshore Wind Sale
2024-08-14 - The offshore wind lease sale for two areas in the Central Atlantic brought in nearly $93 million, according to the U.S. Bureau of Ocean Energy Management.