IEA still sees record 2020 oil demand fall but easing lockdowns helping

IEA still sees record 2020 oil demand fall but easing lockdowns helping
Crude oil tanker Maran Cassiopeia in the waters off Tuas, Singapore, July 15, 2019. (Reuters)
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Updated 14 May 2020

IEA still sees record 2020 oil demand fall but easing lockdowns helping

IEA still sees record 2020 oil demand fall but easing lockdowns helping
  • Demand is expected to fall by 8.6 million barrels per day (bpd), the IEA said in its monthly report, raising its estimate by 690,000 bpd
  • In revising its forecast, the energy watchdog cited stronger-than-expected mobility in some European countries and the US

LONDON: Oil demand is still set for a record fall in 2020, the International Energy Agency (IEA) said on Thursday, but it trimmed its forecast for the drop citing easing lockdown measures.
Demand is expected to fall by 8.6 million barrels per day (bpd), the IEA said in its monthly report, raising its estimate by 690,000 bpd compared to last month.
Around 2.8 billion people will be living under confinement measures aimed at containing the novel coronavirus at the end of May, down from 4 billion in April, the Paris-based IEA said.
In revising its forecast, the energy watchdog cited stronger-than-expected mobility in some European countries and the United States as well as higher Chinese demand as it recovers from the virus outbreak.
“Economic activity is beginning a gradual-but-fragile recovery. However, major uncertainties remain. The biggest is whether governments can ease the lockdown measures without sparking a resurgence of COVID-19 outbreaks,” it said.
Led by the United States and Canada, producers outside the Organization of the Petroleum Exporting Countries and allies like Russia, the so-called OPEC+ grouping, saw a fall in April output by 3 million bpd compared to the start of the year.
The IEA predicted that by the end of 2020, the United States would be the biggest single contributor to supply reductions, down 2.8 million bpd year on year.
“It is on the supply side where market forces have demonstrated their power and shown that the pain of lower prices affects all producers,” the IEA said.
But IEA director Fatih Birol said on a call with reporters that recently announced output cuts by major Gulf Arab producers would likely not be enough to balance global markets.
“I am happy to see Saudi Arabia, the Emirates and Kuwait — on top of their existing commitments — are now going to make further cuts. I do welcome them. Whether or not this is enough, I do not think so,” Birol said on the call after the IEA released its monthly report.
“We are seeing the early signs of a start of recovery, but it is far too early to say we are soon going to reach the rebalancing of the markets,” he added, renewing a call to OPEC+ countries to consider further cuts.
The shortage of oil storage capacity worldwide and especially in the United States has addled markets and weighed on crude prices in recent weeks, but the IEA predicted a recovery was likely approaching.
It predicted 5.5 million bpd of a “massive” implied increase in crude oil stocks of 9.7 million bpd in the first half of the year would be drawn down in the second half, assuming no resurgence of the virus and full commitment to production cuts.


Malaysia takes legal action against EU over palm biofuel curbs

Malaysia takes legal action against EU over palm biofuel curbs
Updated 17 January 2021

Malaysia takes legal action against EU over palm biofuel curbs

Malaysia takes legal action against EU over palm biofuel curbs
  • Palm oil constitutes 30 percent of the global oils and fats production

KUALA LUMPUR: Malaysia is taking legal action at the global trade watchdog against the EU and member states France and Lithuania for restricting palm oil-based biofuels, the government said.

The world’s second largest palm oil producer, which has called a EU renewable-energy directive “discriminatory action,” is seeking consultations under the WTO’s Dispute Settlement Mechanism, the Plantation Industries and Commodities Ministry said in a statement.

Minister Mohd Khairuddin Aman Razali said the EU proceeded with implementing the directive without considering Malaysia’s commitment and views, even after Malaysia gave feedback and sent economic and technical missions to Europe.

The EU directive “will mean the use of palm oil as biofuel in the EU cannot be taken into account in the calculation of renewable energy targets and in turn create undue trade restrictions to the country’s palm oil industry,” he said in the statement.

The ministry filed the WTO request with cooperation from the Attorney General’s Chambers and the International Trade and Industry Ministry, taking action it had warned of in July against EU Renewable Energy Directive II.

Malaysia will act as a third party in a separate WTO case lodged by neighboring Indonesia, the world’s biggest palm oil producer, as a sign of solidarity and support, the ministry statement said.

Indonesia and Malaysia, together account for 85 percent of the global output of palm oil. Palm oil constitutes 30 percent of the global oils and fats production, and plays a significant role in fulfilling the demand in the global oils and fats market.

It is the world’s most produced and traded edible oil, and its versatility can be seen through its use in a wide range of food and nonfood products, which led to the remarkable palm oil consumption growth.

The US imported approximately $410 million of crude palm oil from Malaysia in 2020, CNN reported.