Global oil demand unlikely to get vaccine boost until later in 2021: IEA

Global oil demand is unlikely to get a significant boost from the roll-out of vaccines against COVID-19 until well into 2021, the International Energy Agency (IEA) said on Thursday, a view that is likely to dampen oil price gains since vaccine progress was announced earlier this week.

“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 in its monthly report.

“The poor outlook for demand and rising production in some countries … suggest that the current fundamentals are too weak to offer firm support to prices.”

While noting that OECD countries had modestly drawn down their crude oil stocks for two months in a row by September, the IEA said that storage levels were still not far from peaks in May at the height of the pandemic.

It cited a resurgence of Covid-19 infections in Europe and the United States and renewed lockdown measures for revising down its outlook for global oil demand for 2020 by 400,000 barrels per day (bpd) compared with its last estimate.

Plans by the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia to taper their production cut pact from January would mean much oil would remain in storage.

“Unless the fundamentals change, the task of re-balancing the market will make slow progress,” the IEA said.