IEA sees oil market stuck between no major slowdown but stalled recovery

By Noah Browning
LONDON, Sept 7 (Reuters) - The global economy is likely not
headed for any major slowdown due to COVID-19 but piled-up
storage and uncertainty over China's oil demand cloud oil
markets' recovery, an official with International Energy Agency
(IEA) said.
Keisuke Sadamori, IEA director for energy markets and
security, told Reuters the outlook for oil was in the midst of
either a second wave or a steady first wave of the coronavirus.
"There is an enormous amount of uncertainty, but we don't
expect any additional serious slowdown in the coming months."
"Even though (the market is) not expecting real robust
growth coming back soon, the view on demand is more stable
compared with three months ago," he said in an interview.
Crude prices LCOc1 CLc1 plunged in spring to historic
lows as the pandemic's lockdowns crushed demand, and have pared
losses but remained stuck near $40 a barrel.
The IEA cut its 2020 oil demand forecast in its monthly
report on Aug. 13, warning that reduced air travel would lower
global oil demand by 8.1 million barrels per day (bpd).
The Paris-based agency downgraded its outlook for the first
time in three months, as the epidemic continues to wreak
economic pain and job losses worldwide.
With Brent crude registering its first weekly loss since
June on Friday, markets have grown increasingly nervous over
demand, poor refining margins and slow economic growth, reducing
incentives to draw crude and products from abundant stocks.
"It doesn't seem like a massive stock draw seems to be
happening yet," Sadamori said.
"We are not seeing a robust pickup in refining activity, and
jet fuel is the big problem," he added.
China, the world's largest crude importer, emerged from an
economic lockdown sooner than other major economies and used its
financial muscle to make record oil imports in recent months, a
rare bright spot amid global demand destruction.
But geopolitical tensions could call into doubt "to what
extent it can be sustainable and last long", Sadamori said.
"There are so many uncertainties with regard to the Chinese
economy and their relationship with key industrialized
countries, with the U.S. and these days, even Europe. It's not
such an optimistic situation - that casts some shadow over the
growth outlook".