The world’s oil demand fell for a third consecutive month in August following an increase in Covid-19 cases in Asia, but a sharp rebound could follow in the final months of the year, according to the International Energy Agency (IEA).
Our energy correspondent Jillian Ambrose explains:
The global energy watchdog revised down its oil demand forecasts for the third quarter by 200,000 barrels a day after China put in new measures to curb travel by a third in a bid to stem the latest outbreak of Covid-19.
“Global oil demand remains under pressure from the virulent Covid-19 Delta variant in key consuming areas, especially parts of Asia,” the Paris-based agency said in its latest monthly oil market report.
The IEA said that despite the weak demand over recent months oil demand is expected to rebound in October as Asia’s energy-hungry economies begin to reopen with help from falling Covid-19 case numbers, progress in vaccine manufacturing and less restrictive social distancing measures.
The report said:
“Already signs are emerging of COVID cases abating with demand now expected to rebound by a sharp 1.6 million barrels per day (bpd) in October, and continuing to grow until end-year.”
The slowdown has caused the IEA to trim its oil growth forecasts for the year by 105,000 barrels of oil a day, but raise its estimate for 2022 by 85,000 barrels a day to 3.2m barrels a day.
Global oil consumption is expected to average 99.1m barrels of oil a day this year, around 4.7m barrels of oil a day higher than last year but still 1.1m barrels a day lower than in 2019.
Despite the oil market slowdown over the summer months global market prices have continued to rise, reaching a six week high of $73.51 a barrel earlier this week as US oil productions remains slow to return to full strength two weeks after Hurricane Ida wreaked havoc along the oil-rich Gulf Coast.
Further disruptions are expected from bad weather this week as Tropical Storm Nicholas has forced Royal Dutch Shell to evacuate staff from a Gulf of Mexico oil platform, and other companies have prepared for rain and hurricane-force winds.
The unplanned US outages have offset the increase in supply from the Organisation of Petroleum Exporting Countries (Opec) and its allies, leading the world’s total oil supply to fall by 540,000 barrels of oil a day last month.