The International Energy Agency (IEA) joined the chorus of analysts saying that the pace of global oil demand recovery has stalled in recent weeks on the back of weak refining margins, a lack of recovery in jet fuel demand, and uncertainties over global economic growth, including in the world's top oil importer, China.
Although the IEA doesn't forecast major slowdowns in demand going forward, global oversupply has yet to show strong signs of drawdowns, Keisuke Sadamori, Director, Energy Markets and Security at the IEA, told Reuters.
"It doesn't seem like a massive stock draw seems to be happening yet," Sadamori told Reuters, noting that "We are not seeing a robust pickup in refining activity, and jet fuel is the big problem."
Uncertainties over the course of China's economy and by extension, oil demand, are also weighing on the oil market, according to the official.
In its latest Oil Market Report for August, the IEA downgraded its oil demand forecast for this year by 140,000 bpd compared to the estimate from the previous month's report. This was the first downgrade in several months, "reflecting the stalling of mobility as the number of Covid-19 cases remains high, and weakness in the aviation sector," the IEA said.
The IEA expected in the middle of August that crude oil demand this year would be 8.1 million bpd lower than it was in 2019.
The market will be waiting for the most recent assessment from the IEA in its next report scheduled to be released on September 15.
OPEC also revised down its oil demand forecast in August, pointing to still struggling fuel demand and continued high uncertainty about the pandemic's impact on economies and mobility.
The wobbling pace of oil demand recovery and the uncertainties over economic growth in major economies have weighed down on oil prices recently. Last week, oil prices slumped to register their largest weekly decline since June.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More