By Adedapo Adesanya
- Global oil supply falls to nine-year low in June.
The International Energy Agency (IEA) has increased its 2020 oil demand forecast on Friday to 92.1 million barrels per day, up 400,000 barrels per day from its outlook in June, citing a lesser decline than expected in the second quarter of the year.
In its monthly oil report published on Friday, it noted that the appetite for oil still remain weakened by the novel coronavirus (COVID-19), which is suppressing overall oil demand.
It said global oil demand is forecast to average 92.1 million barrels per day in 2020 and 97.4 million barrels per day in 2021.
According to the Paris-based organisation, global oil demand will decline by 7.9 million barrels per day in 2020 but recover by 5.3 million barrels per day in 2021. However, it added, “the recent increase in COVID-19 cases and the introduction of partial lockdowns introduces more uncertainty to the forecast.”
“While the oil market has undoubtedly made progress, the large, and in some countries, accelerating the number of COVID-19 cases is a disturbing reminder that the pandemic is not under control and the risk to our market outlook is almost certainly to the downside,” the IEA said.
On the supply side of things, the agency noted that global supply had declined to its lowest level since 2011 due to massive production cuts made by the Organisation of the Petroleum Exporting Countries and its allies known as OPEC+.
It noted that oil supply globally plunged to an average of 86.9 million barrels per day in June, down 2.4 million barrels per day from May.
In a breakdown, it said all participating members in the OPEC cuts supplied 27.2 million barrels per day in June, down by 1.9 million barrels per day from the previous month’s level of 29.1 million barrels in May.
Also, non-OPEC oil supply decreased to 59.7 million barrels per day in June, a fall of 0.5 million barrels daily from May’s level of 60.1 million barrels per day.
This brought down the world’s total oil supply to the lowest level in nine years, dropping by 2.39 million barrels per day from 89.3 million barrels per day in May to 86.9 million barrels per day last month.
“During June, global oil output tumbled to a nine-year low after Saudi Arabia cut an extra 1 million barrels per day below its OPEC+ target and output in both Iraq and the US fell by around 0.5 million barrels per day.
“Record OPEC+ cuts drove most of the decline in June. The group cut crude output by nearly 2 million bpd more than in May, lifting its overall cut above 10 million bpd and boosting compliance to 108% from 88% a month earlier,” the IEA said.
The easing of lockdown measures in many countries caused a strong rebound to fuel deliveries in May, June and likely also July, the IEA added.
Dipo Olowookere