Oil demand is still set for a record fall in 2020, the International Energy Agency (IEA) said on Thursday, but it trimmed its forecast for the drop citing easing lockdown measures.

Demand is expected to fall by 8.6 million barrels per day (bpd), the IEA said in its monthly report, trimming its estimate by 690,000 bpd.

Around 2.8 billion people will be living under confinement measures aimed at containing the coronavirus at the end of May, down from 4 billion in April, the Paris-based IEA said.

In trimming its forecast it also cited stronger-than-expected mobility in some European countries and the United States as well as higher Chinese demand as it recovers from the virus outbreak.

“Economic activity is beginning a gradual-but-fragile recovery. However, major uncertainties remain. The biggest is whether governments can ease the lockdown measures without sparking a resurgence of COVID-19 outbreaks,” it said.

Led by the United States and Canada, producers outside the so-called OPEC+ grouping saw a fall in April output by 3 million bpd compared to the start of the year.

The IEA predicted that by the end of 2020, the United States would be the biggest single contributor to supply reductions, down 2.8 million bpd year on year.

“It is on the supply side where market forces have demonstrated their power and shown that the pain of lower prices affects all producers,” the IEA said.

REUTERS