Whatâs Going On Here?Call the International Energy Agency (IEA) crazy, but it doesnât think the recently announced vaccine will work on the oil industry: it cut its forecast for global oil demand on Thursday (tweet this). What Does This Mean?Oilâs price has been rising since Pfizer and BioNTech reported the success of their coronavirus vaccine trial earlier this week, reinvigorating hopes for an uptick in demand. But the IEA has been quick to poop on that particular party, saying it doesnât expect demand to rise in any significant way till late 2021.
The IEA report came the day after OPEC â an alliance between the worldâs most powerful oil-producing nations â lowered its outlook for next year, even after the group cut production a few months ago in an effort to stabilize prices. Itâs now expected to gradually ramp up production again, and it'll meet at the end of this month to work out how best to go about it. Why Should I Care?For markets: Nice try.
Big oil companies have more than just lower demand to deal with: the US president-electâs green energy plan is also a threat to the dusky nectar. Even so, the prospect of the countryâs most progressive climate strategy in history doesnât seem to have fazed industry bigshots, who think the newcomerâs ambitious plans are likely to be toned down â if not blocked altogether.
The bigger picture: U holding up K?
A lack of demand isnât just punishing the oil industry: the UK said on Thursday that its economy is still almost 10% smaller than it was before the pandemic, even though last quarter saw the countryâs biggest growth ever. To add insult to injury, its recovery is trailing behind its G7 buddies, while new lockdown measures could be about to push the country back into recession. At least the UKâs central bank was prepared for this: it pumped more money into the economy last week to keep it from going into freefall. | 