The International Energy Agency on Tuesday cut its forecast for 2020 oil demand growth, citing a “treacherous” path ahead amid weakening market sentiment and an upsurge in the number of coronavirus cases reported across the globe.
In a closely-watched monthly report, the IEA trimmed its outlook for worldwide oil demand growth to 91.7 million barrels per day. That marks a contraction of 8.4 million bpd year-on-year, more than the 8.1 million bpd contraction predicted in the Paris-based energy agency’s August report.
“We expect the recovery in oil demand to decelerate markedly in the second half of 2020, with most of the easy gains already achieved,” the IEA said.
“The economic slowdown will take months to reverse completely, while certain sectors such as aviation are unlikely to return to their pre-pandemic levels of consumption even next year.”
International benchmark Brent crude traded at $39.52 a barrel on Tuesday morning, down around 0.2%, while U.S. West Texas Intermediate crude (WTI) stood at $37.18, roughly 0.2% lower.
Oil prices have dropped around 40% since the start of the year.