Vaccines set to unleash pent-up oil demand; expect big jump in Oct: IEA

Brent crude rallies above $74 as Storm Nicholas hits US Gulf Coast

After a three-month slide in global oil demand due to the spread of the Delta variant of Covid-19 and pandemic restrictions, especially in Asia, vaccine rollouts are set to power a rebound, the International Energy Agency (IEA) said on Tuesday.

“Already signs are emerging of Covid cases abating with demand now expected to rebound by a sharp 1.6 million barrels per day (bpd) in October, and continuing to grow until end-year,” the IEA wrote in its monthly oil report.

The IEA forecast a robust rebound in the market from the fourth quarter of the year citing “strong pent-up demand and continued progress in vaccination programmes”. Still, the spread of the Delta variant caused the agency to trim its forecast for demand growth for the year overall by 105,000 bpd, while it raised its estimate for 2022 by 85,000 bpd.

Meanwhile, oil prices hit a six-week high on Tuesday as Hurricane Nicholas weakened into a tropical storm, bringing the threat of widespread floods and power outages to Texas and Louisiana. Brent crude was up 55 cents, or 0.8 per cent, at $74.06 a barrel by 7.04 pm IST after hitting a session high of $74.28. WTI crude climbed 51 cents to $70.96.