David Hodari reports for The Wall Street Journal that a major oil demand rebound is readying for 2021. He writes:
The coronavirus pandemic will hammer global growth and oil demand this year, but supply cuts from producers and a record rebound in demand next year will help to rebalance the oil market, the International Energy Agency said.
In its monthly oil-market report Tuesday, the IEA said that while the world’s demand for crude will drop by 8.1 million barrels a day this year—slightly less than forecast in last month’s report—demand in 2021 will rebound by a record 5.7 million barrels a day.
The emergence in recent weeks of parts of the global economy from coronavirus lockdowns that did unparalleled damage to global economic growth has spurred a recovery in crude demand. China’s oil demand in April was almost back at levels seen a year previously and Indian demand climbed in May.
If that resurgence persists and oil-producing nations stick to their plans to constrict global oil supply, “the market will be on a more stable footing by the end of the second half [of 2020],” the IEA said in its report.
While the decision of the Organization of the Petroleum Exporting Countries and its allies to extend their historic production cuts through July will help speed up the oil market’s rebalancing, “we should not underestimate the enormous uncertainties” the market still faces, the agency said.
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