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Mettis Global News
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IEA says oil outlook improves ‘somewhat’ on easing virus lockdowns, output cuts

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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.


Posted on: 2020-05-14T13:20:00+05:00