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The International Energy Agency (IEA) released its latest oil market report this Tuesday and expects a recovery in oil demand to decelerate markedly during the second half of 2020. IEA reduced 2020 crude oil demand forecast by 200,000 bpd to 91.7 million bpd. The downgrade was attributed to the resurgence of COVID-19 cases, local lockdown measures, remote work and weak aviation.

Key highlights:

  • Keeps 2021 crude oil demand estimate steady at 97.1 million bpd.
  • China continues to recover strongly while India is showing renewed weakness.
  • Global oil supply rose by 1.1 million bpd in August to 91.7 million bpd as OPEC+ cuts eased.
  • Two months of oil supply recovery gains stalled in August among countries outside OPEC+ deal.
  • Preliminary August data show industry crude stocks fell in the United States, Europe, and Japan.
  • US Oil production fell by 400,000 bpd as hurricane Laura forced shut-ins.
  • Non-OPEC supply expected to fall by 2.6 million bpd in 2020, recover by 500,000 bpd in 2021.
  • Recovery in global refining throughput set to slow from Aug. to Oct. due to seasonal maintenance, US hurricanes.
  • Predicts implied stock draws in H2 of about 3.4 million bpd, 1 million bpd less than last estimated.
  • OECD industry stocks rose by 13.5 million barrels in July to record high of 3.225 billion barrels.

The not so optimistic outlook did little to provide any meaningful impetus for oil prices, with WTI confined in a range just above the $37.00/barrel mark.