May 14, 2020: An easing of draconian coronavirus lockdown measures and a spectacular reduction in output are helping the oil market steady after a “Black April,” the International Energy Agency said Thursday.
“Since then, the outlook has improved somewhat and prices, while still far below where they were before the start of the COVID-19 crisis, have rebounded from their April lows,” it said in its latest monthly report.
The IEA said the focus in its April review was the “demand destruction on a historic scale” caused by the coronavirus pandemic, which slashed consumption just as OPEC kingpin Saudi Arabia and Russia, its erstwhile OPEC+ group ally, started a price war and pumped even more crude into an already flooded market.
The result — prices at more than 20-year lows, plunging at one point to an unprecedented minus $40 a barrel before Saudi Arabia and Russia finally called a halt and agreed to overall production cuts of 9.7 million barrels per day. Since then, Saudi Arabia has promised to reduce output further while non-OPEC states — especially the United States — have also slashed production in an effort to stabilise the market.
The recent price recovery is due to “the easing of lockdown measures and — more important — steep production declines in non-OPEC countries alongside the commitments made by the OPEC+ agreement,” the IEA said.
“We estimate that from a recent peak of four billion, the number of people living under some form of confinement at the end of May will drop to about 2.8 billion worldwide,” it said.
