Oil Gains Ground As IEA Keeps Its Demand Forecasts Intact

Oil Video 14.10.20.

IEA Forecasts World Oil Demand Of 91.7 Million Barrels Per Day In 2020

International Energy Agency (IEA) has just released its Oil Market Report for October 2020.

Interestingly, IEA decided to leave its 2020 forecast for oil demand unchanged at 91.7 million barrels per day (bpd). For the next year, IEA expects oil demand of 97.2 million bpd.

IEA noted that preliminary data for September indicated that crude stocks declined in U.S. and Japan but increased in Europe. This is not surprising since Europe is currently suffering from the second wave of coronavirus and European countries had to implement additional virus containment measures.

IEA also stated that crude inventories will decline by 4 million bpd in the fourth quarter of this year. While it looks like a major move forward for the oil market, OPEC+ will increase its production by 1.9 million bpd at the beginning of 2021. In this situation, the market needs a sustainable recovery in oil demand to deal with excessive inventories.

Today, traders will have a chance to look at the new API Crude Oil Stock Change report. Tomorrow, EIA will release its latest crude inventory data.

The key question for traders is the impact of the recent Hurricane Delta which forced U.S. Gulf of Mexico producers to evacuate workers from platforms. Currently, analysts expect that inventory reports will indicate that inventories declined by 3.4 million barrels.

Saudi Aramco Believes That The Worst Is Behind For The Oil Market

While many oil traders are worried about the potential impact of the second wave of the virus, Saudi Aramco sees light at the end of the tunnel.

According to the company’s CEO Amin Nasser, oil demand will return to pre-pandemic levels by 2022. In addition, he expects supply to tighten due to insufficient levels of investment which should create a deficit.

Interestingly, OPEC has recently cut its 2021 oil demand estimate by 80,000 bpd to 96.84 million bpd. As noted above, IEA is currently more optimistic than OPEC.

It remains to be seen whether traders will pay attention to longer-term oil demand forecasts or continue to focus on near-term developments. The futures market is not optimistic about oil price recovery – WTI December 2021 futures trade just above the $43 level.

For a look at all of today’s economic events, check out our economic calendar.