International Energy Agency forecasts global oil demand to fall by 8.6 million barrels per day in 2020

Oil markets have recovered somewhat this month, but there continues to be an oversupply.

But according to the Paris-based International Energy Agency, "the gradual easing of lockdown measures" has led to an upward adjustment in its demand forecast.

From April to June, the IEA's Oil Market Report - May 2020 predicts that the use of oil to be 19.9 million barrels per day less than what was burned at that time last year.

"The peak decline for global refining activity has shifted to May as our April throughput estimate was revised up on new data and higher demand," the report states. 

By year-end, however, the demand drop is expected to be 8.6 million barrels per day—slightly higher, by 0.7 million barrels per day—than a previous IEA forecast.

The IEA predicts that the global oil supply will fall by 12 million barrels per day in May, plunging to 88 million barrels per day, as a result of an OPEC production agreement taking effect and reductions in non-OPEC countries.

"For some OPEC countries, e.g. Saudi Arabia, Kuwait and the UAE, lower May production is from record highs in April," the report notes. "Led by the United States and Canada, April supplies from countries outside of the deal were already 3 mb/d lower than at the start of the year."

Over the years, the IEA has repeatedly missed the mark with its demand forecasts for renewable energy.

Goldman Sachs stated in a May 13 note that rising demand and lower production will push the oil market into deficit in June, according to Reuters.

The investment house is forecasting summer prices of US$30 per barrel for Brent crude oil and US$28 per barrel for West Texas Intermediate crude oil.

As of this writing, Brent crude is trading at US$30.31 and West Texas Intermediate crude is US$26.28 per barrel, according to Oilprice.com.