International Energy Agency (IEA) sees oil market stuck between no major slowdown but stalled recovery

Reuters reports that the global economy is likely not headed for any major slowdown due to COVID-19 but piled-up storage and uncertainty over China's oil demand cloud oil markets' recovery, an official with International Energy Agency (IEA) said.

Keisuke Sadamori, IEA director for energy markets and security, told Reuters the outlook for oil was in the midst of either a second wave or a steady first wave of the coronavirus.

"Even though (the market is) not expecting real robust growth coming back soon, the view on demand is more stable compared with three months ago," he said in an interview.

The IEA cut its 2020 oil demand forecast in its monthly report on Aug. 13, warning that reduced air travel would lower global oil demand by 8.1 million barrels per day (bpd).

The Paris-based agency downgraded its outlook for the first time in three months, as the epidemic continues to wreak economic pain and job losses worldwide.

"It doesn't seem like a massive stock draw seems to be happening yet," Sadamori said.

"We are not seeing a robust pickup in refining activity, and jet fuel is the big problem," he added.

China, the world's largest crude importer, emerged from an economic lockdown sooner than other major economies and used its financial muscle to make record oil imports in recent months, a rare bright spot amid global demand destruction.

But geopolitical tensions could call into doubt "to what extent it can be sustainable and last long", Sadamori said.