Fatih Birol, Executive Director of the International Energy Agency (IEA), speaks at Equinor’s Autumn conference in Norway on November 26, 2019. Source: Ole Berg-Rusten/NTB Scanpix via Reuters.
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  • Oil prices record a second day of declines after the International Energy Agency (IEA) warned that demand growth has slowed
  • Steadily increasing demand for crude came to a halt in July and is expected to rise at a slower pace over the rest of this year
  • In contrast, the Organisation of the Petroleum Exporting Countries (OPEC) has forecast an uptick in demand through to next year
  • Brent crude is down 31 cents at US$71.00 a barrel while US crude is down 33 cents at US$68.76 a barrel

Oil prices have recorded a second day of declines after the International Energy Agency (IEA) warned that demand growth has slowed due to a resurgence in COVID-19 cases worldwide.

Brent crude is down 31 cents at US$71.00 a barrel, adding to a drop of 13 cents seen on Thursday, while US crude is down 33 cents at US$68.76 a barrel.

Steadily increasing demand for crude came to a halt in July and is expected to rise at a slower pace over the rest of this year, the IEA said on Thursday: “Growth for the second half of 2021 has been downgraded more sharply, as new COVID-19 restrictions imposed in several major oil consuming countries, particularly in Asia, look set to reduce mobility and oil use.”

In contrast, the Organisation of the Petroleum Exporting Countries (OPEC) said on Thursday that it stood by its forecast for a rebound in demand globally this year, with further growth expected in 2022 — notwithstanding concerns about the current surge in cases.

OPEC also raised its expectations for supplies next year from other producers, like US shale drillers, which could potentially thwart efforts by the group to achieve balance in the market.

“Although OPEC left its demand forecast unchanged, we think that the near-term demand outlook has deteriorated, which may mean that the group adjusts down its supply plans at its next meeting,” said Caroline Bain, chief commodities economist at Capital Economics.

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