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Oil gains despite IEA cuts 2021 oil demand outlook as Covid-19

Oil gains on stimulus optimism ahead of Biden inauguration

Oil prices climbed with U.S. stock markets on Tuesday ahead of Joe Biden’s inauguration as U.S. president on optimism that more government stimulus will eventually lift global economic growth.

Brent futures for March delivery rose $1.15, or 2.1%, to settle at $55.90 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 62 cents, or 1.2%, to settle at $52.98. Front-month February WTI futures expire on Wednesday.

Wall Street’s main indexes rose after upbeat earnings from big U.S. banks and comments from U.S. Treasury Secretary nominee Janet Yellen ahead of Biden’s inauguration on Wednesday.

IEA cuts 2021 oil demand outlook as new Covid lockdowns weigh on fuel sales

The International Energy Agency on Tuesday cut its 2021 global oil demand forecast, citing soaring Covid-19 cases and renewed lockdown measures that will further limit mobility.

The IEA said it now expects world oil demand to recover by 5.5 million barrels per day to 96.6 million this year. That reflects a downward revision of 0.3 million barrels from last month’s assessment and follows an unprecedented collapse of 8.8 million barrels per day last year as the coronavirus pandemic battered global oil markets.

The IEA’s latest oil market report comes as countries continue to implement strict public health measures in an attempt to curb virus spread, with lockdowns imposed in Europe and parts of China.

The Paris-based energy agency said oil demand growth was projected to fall slightly during the first three months of the year in the wake of tougher government plans that call for additional travel restrictions.

This is expected to curb worldwide mobility once again, prompting the IEA to trim its first-quarter forecast for oil demand growth to 94.1 million barrels per day. That would see oil demand return to near year-ago levels and reflects a downward revision of 0.6 million barrels from December’s oil market report.

Reference: CNBC, Reuters