IEA monthly warning: new crown vaccine won’t save global crude demand in short term

On Thursday, November 12, the Paris, France-based International Energy Agency IEA released its monthly oil report, continuing to cut its global crude oil demand forecast for this year and next, and warning that the new crown vaccine will not save the oil market until late next year.

Due to the new crown epidemic in Europe and the United States renewed surge, the IEA will 2020 third quarter global crude oil demand expectations by 400,000 barrels per day, will be the fourth quarter of demand expectations by 1.2 million barrels per day, that this year a total of 8.8 million barrels of crude oil demand fell 8.8 million barrels per day to a total of 91.3 million barrels per day, lower than the average of 2013, and the organization in October had predicted that a total of 8.4 million barrels per day of oil demand this year will fall.

The IEA also lowered its forecast for global crude demand in the first quarter of 2021 by 0.7 million b/d, although it believes overall demand in 2021 will rebound by 5.8 million b/d (incremental), up from an expected rebound of 5.5 million b/d in the October report, but next year’s total demand of 97.1 million b/d is still lower than previous estimates and 3 million b/d lower than before the outbreak.

According to the report, the neocon vaccine is unlikely to boost oil markets until the second half of 2021.

“Vaccines won’t significantly increase oil demand until some time after the start of next year. It is too early to predict how and when the vaccine will get people back on their feet, and at this point we do not expect the vaccine to have a significant impact on the oil market in the first half of 2021.”

While demand is softening, oil supply is moving higher.The IEA said global oil supply increased by 200,000 barrels per day in October this year to a total of 91.2 million barrels per day; November’s oil supply may Zhang over 1 million barrels per day, mainly due to the resumption of production by U.S. producers after hurricane disruptions, as well as the rapid increase in production by OPEC member Libya after the end of an eight-month blockade.

The analysis pointed out that OPEC released yesterday’s oil report also lowered this year and tomorrow’s crude oil demand expectations, consistent with the IEA’s cautious tone.

IEA clearly pointed out that, in the short term, the bearish demand outlook and some countries to enhance production, “means that the current fundamentals are too weak, thus unable to provide firm support for oil prices”; spot oil prices are lower than futures prices, on behalf of the current market supply is sufficient, OECD rich country coalition in September crude oil inventories declined by 1,970% from the previous year. million barrels to 3.19 billion barrels, just 4% below the high in May.

The monthly report further points out that given that the neocon vaccine will not be able to save the global oil market for some time, this will set up a problem for OPEC+, led by Saudi Arabia and Russia, to meet on production on December 1. If OPEC+ cuts production quotas by 2 million barrels per day from January next year (i.e., an increase of that magnitude), it would result in almost zero change in oil stocks in Q1 2021:.

“Unless fundamentals change, the task of rebalancing the market will proceed slowly.”

Earlier, many mainstream analysts had argued that OPEC+ should extend the scale of existing production cuts to support oil prices. Yesterday’s update said that OPEC+ is discussing a three- to six-month delay in the planned production increase that will take effect next January.

Thursday the US Energy Information Administration EIA also released the official version of the oil storage data. the week of November 6, EIA crude oil inventories unexpectedly increased by 4.277 million barrels, the market was expected to reduce by 1.90 million barrels, the previous value of 7.998 million barrels.

However, oil product inventories fell by a larger amount and demand for petroleum products rose to a new high since March. This made the week’s EIA gasoline inventory change decreased by 2.309 million barrels, and decreased for nine weeks, is expected to increase by 400,000 barrels, the previous value of an increase of 1.541 million barrels; refined oil inventories decreased by 5.335 million barrels, is expected to decrease by 1.65 million barrels, the previous value of a decrease of 1.584 million barrels.

After the release of the data, the U.S. oil WTI that month futures short shed about $ 0.50, the lowest touch $ 41.60 / barrel, making the overall intra-day gains narrowed to 0.3%, had traded at $ 42 10-week highs. International Brent oil prices also once fell to $ 44 round-digit level, but this week’s cumulative gains of nearly 10%, is expected to record the best weekly performance since June.