IEA says Covid vaccine ‘unlikely to ride to the rescue’ of world oil market for some time

Rail wagons for oil, fuel and liquefied gas cargo stand in sidings at Yanichkino railway station, close to the Gazprom Neft PJSC Moscow refinery in Moscow, Russia, on Monday, April 27, 2020.

Andrey Rudakov | Bloomberg | Getty Images

LONDON — The International Energy Agency (IEA) on Thursday cut its 2020 global oil demand forecast and said it does not expect the prospect of a coronavirus vaccine to significantly boost demand “until well into next year.”

In its latest closely-watched monthly report, the IEA said it now expects world oil demand to contract by 8.8 million barrels per day this year. That reflects a downward revision of 0.4 million barrels from last month’s assessment.

The Paris-based energy agency trimmed its near-term outlook on weak historical data and a resurgence of Covid-19 cases in Europe and the U.S.

For 2021, the IEA said world oil demand growth will rise by 5.8 million barrels per day, representing an upward revision of 0.3 million barrels from last month.

Oil prices have notched three consecutive trading sessions of gains since Pfizer and BioNTech said Monday that early results showed their vaccine candidate was more than 90% effective in preventing Covid infections.

It is hoped a safe and effective vaccine could help bring an end to the coronavirus pandemic that has claimed over 1.28 million lives worldwide.

Huge challenges remain before a Covid-19 vaccine can be rolled out, but oil markets cheered the news, hoping it could lead to increased energy demand in the coming months.

“However, it is far too early to know how and when vaccines will allow normal life to resume. For now, our forecasts do not anticipate a significant impact in the first half of 2021,” the IEA said.

International benchmark Brent crude futures traded at $43.66 a barrel on Thursday morning, down around 0.3%, while U.S. West Texas Intermediate crude stood at $41.33, roughly 0.35% lower.

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