Mayank Makhija | Nurpo via Getty Image
LONDON – OPEC has cut its forecast for growth in oil demand this year, citing weak-to-expected recovery in India and other Asian countries, and warned that risk for the first half of next year ” High and diagonally downwards “.
In a monthly viewing monthly report published on Monday, the group of oil producing countries revised their outlook for global oil demand to an average of 90.2 million barrels per day in 2020. This is 400,000 bpd below last month’s estimate and reflects a contraction. 9.5 million bpd year-on-year.
The report comes as energy market participants have to worry about a staggering economic recovery and stumbled fuel demand in the wake of the coronovirus epidemic.
Middle East-dominated conglomerates, including some of the world’s largest oil producers, said there was an improvement in oil demand in OECD countries on Monday, which was at least in all sub-sectors during the second period. The cause was about 100,000 bpd. Quarter
However, weak oil demand performance in Asia, especially in India, led to a decrease of 500,000 bpd in oil demand in the non-OECD sector.
Looking ahead, OPEC stated that the negative impact on oil demand in Asia is expected to persist during the first six months of 2021.
“Additionally, the risks remain high and downward diagonally, particularly in relation to cases of Kovid-19 infection and the development of potential vaccines,” the group said in the report.
In addition, the pace of recovery in economic activity in other Asian countries, including India, and the potential for increased oil demand remain uncertain.
As such, OPEC expects global oil demand to grow to 6.6 million bpd at an average of 96.9 million bpd next year. This updated forecast was also 400,000 bpd lower than its previous estimate.
International benchmark Brent crude traded at $ 39.76 a barrel on Monday, down about 0.2%, while the US West Texas Intermediate (WTI) was down about 0.1%, at $ 37.26.
Oil prices have fallen nearly 40% since the beginning of the year.
‘Dismal’ oil demand increases
Marking the group’s 60th anniversary, OPEC Secretary-General Mohammed Barkindo said Monday that the coronavirus epidemic was “one of the greatest global challenges of modern times.”
“Beyond the terrible human suffering it has caused, it has accelerated the worst global economic downturn in OPEC’s history and the decline in the oil market,” he said.
OPEC with non-OPEC partners, known collectively as OPEC +, will meet on 17 September to discuss oil production policy. The Energy Alliance has agreed to cut production by 7.7 million bpd by December.
“Transition rates are rising again. Local lockdowns have begun in countries hampering regional economic growth and the number of unemployed is declining significantly,” said Tamas Varga, senior analyst at PVM Associates. The note was published on Monday.
“This leads to an increase in oil demand as reflected in last week’s weekly and monthly EIA reports.”
Earlier this month, the US Energy Information Administration cut its outlook for 500,000 bpd in 2021 global demand on a lower projected consumption growth in China.