FXEMPIRE
All
Ad
Advertisement
Advertisement
Vladimir Zernov
Add to Bookmarks
Crude Oil

Oil Video 14.05.20.

Advertisement

IEA Expects That Oil Demand Will Fall By 8.6 Million Barrels Per Day

Today, oil gains ground despite the weakness in the equity markets due to International Energy Agency report which stated that 2020 oil demand would contract by 8.6 million barrels per day (bpd) compared to the previous expectation of a 9.3 million bpd contraction.

Advertisement
Know where WTI Crude Oil is headed? Take advantage now with 

Trading Derivatives carries a high level of risk to your capital and you should only trade with money you can afford to lose. Trading Derivatives may not be suitable for all investors, so please ensure that you fully understand the risks involved, and seek independent advice if necessary. A Product Disclosure Statement (PDS) can be obtained either from this website or on request from our offices and should be considered before entering into a transaction with us. Raw Spread accounts offer spreads from 0.0 pips with a commission charge of USD $3.50 per 100k traded. Standard account offer spreads from 1 pips with no additional commission charges. Spreads on CFD indices start at 0.4 points. The information on this site is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

IEA notes that better than expected mobility in OECD countries as well as the easing of lockdown measures have led to an upward adjustment of demand forecast for the second quarter of this year.

Meanwhile, oil supply is set to fall by 12 million bpd in May as IEA sees OPEC+ countries complying with their new production quotas while production cuts from other countries further decrease available supply.

Indeed, yesterday’s EIA Weekly Petroleum Status report has shown that the U.S. production continues to fall. It is highly likely that the U.S. oil production will continue to slide as current oil prices make many wells uneconomic.

In general, IEA believes the the outlook for oil has improved since April and that production cuts have already played an important role in the stabilization of oil markets.

Coronavirus And Trade War Fears May Put Pressure On Oil

The recent optimism in the oil market is based on the assumption that demand will improve while supply stays at low levels due to the OPEC+ deal and production cuts by non-OPEC+ countries.

For this thesis to play out, economies should start to gradually recover while the virus must remain under control despite the lifting of the lockdown measures.

The recent U.S. Initial Jobless Claims report has shown that the U.S. economy continues to lose jobs at an alarming pace which means that the recovery may take longer than expected.

Another potential problem may come from the trade war front as the U.S. is increasingly disappointed with China’s handling of coronavirus which has wrecked havoc in the world economy.

At this point, the U.S. limits itself to verbal interventions but if it proceeds with real actions like tariffs or sanctions, global trade may suffer at inopportune time, putting additional pressure on oil demand.

Thus, while the IEA report paints a brighter picture than in the previous month, oil traders may still remain cautious as they try to evaluate the speed at which the global economy recovers from the huge blow dealt by the virus.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker