PARIS, 11 July. - (ANA) - The International Energy Agency (IEA) raised its 2020 oil demand forecast today but warned the ongoing spread of coronavirus could cause more disruption.

 

The organisation raised its oil demand forecast to 92.1m barrels per day, 400,000 higher than its prediction last month as the virus-struck second quarter suffered a smaller decline than expected.

 

But the Paris-based body pointed to huge surges in coronavirus cases as a risk to future demand.

 

The US recorded a record-breaking 60,500 new coronavirus cases yesterday as infections spiked in Florida, Texas and California.

 

And Hong Kong has just suspended schools after counting 38 new cases today, with 32 of them transmitted locally.

 

“In some countries, accelerating number of COVID-19 cases is a disturbing reminder that the pandemic is not under control and the risk to our market outlook is almost certainly to the downside,” the IEA said in its monthly report today.

 

Relaxations of lockdowns around the world helped fuel demand rebound in May and June, the IEA said. It expects July to follow the trend.

 

But oil prices fell today despite the prediction. European benchmark Brent crude fell 2.3 per cent to $41.39 while US benchmark West Texas Intermediate slumped 2.6 per cent.

 

And the IEA warned oil refining activity will fall more steeply than predicted in 2020 and grow less than forecast next year.

 

“For refiners, any benefit from improving demand is likely to be offset by expectations of much tighter feedstock markets ahead,” the IEA’s report said.

 

“Refining margins will also be challenged by a major product stocks overhang from the very weak second quarter of 2020.”

 

Brent crude slumped to below $20 a barrel in April to hit an 18-year low. Since then it has found its footing up at around $41 after major producers opted to slash output dramatically to respond to the crash in demand.

 

Declines from oil cartel Opec – comprising Middle East countries and led by Saudi Arabia, and ally Russia, are happening in tandem with cuts in the US and Canada.

 

Oil production output has fallen by 14m barrels per day since April, while global supply could fall by 7.1m barrels per day in 2020 before climbing by 1.7m barrels per day in 2021.

 

Around the world, demand dived by 16.4m barrels per day in the second quarter in response to lockdowns and international travel bans.

 

A recovery of demand in China and India means these falls should partly recover in 2021. But the IEA warned: “The recent increase in Covid-19 cases and the introduction of partial lockdowns introduces more uncertainty to the forecast.”

 

Today the UK ended its quarantine for 59 countries and British territories overseas, though Scotland will continue to enforce two weeks of self-isolation for travellers.

 

AB/ANA/11 July 2020 - - -