Vaccine rollouts are brightening the outlook for global oil demand, the International Energy Agency (IEA) said on Wednesday, though rising cases in some major oil-consuming countries show a recovery may be fragile.
“Fundamentals look decidedly stronger,” the IEA said in its monthly report.
“The massive overhang in global oil inventories that built up during last year’s COVID-19 demand shock is being worked off, vaccine campaigns are gathering pace and the global economy appears to be on a better footing.”
Citing rising cases in Europe, Brazil and the United States, the Paris-based watchdog said it remained concerned about new waves of the virus derailing progress.
Still, the IEA predicted global oil demand and supply were set to re-balance in the second half of the year and that producers may then need to pump 2 million barrels per day more to meet the expected demand.
OPEC and allies including Russia, a grouping known as OPEC+, can tailor their output to meet demand whether the virus is tamed or not, the IEA added.
“The bloc’s monthly calibration of supply may give it the flexibility to meet incremental demand by ramping up swiftly or adjusting output lower should the demand recovery fail to keep pace.”29dk2902l