OPEC Slashes 2020 Global Oil Demand Forecast
The Organisation of Petroleum Exporting Countries still sees a rise in global crude oil demand for 2020 despite the spread of the coronavirus, but now expects an increase of just 60,000 barrels per day, it said on Thursday.
That is 920,000 bpd less than it forecast last month, the organisation said in its first analysis of 2020 market fundamentals since its ministerial summit last week with Russia and other key producers broke down, resulting in an escalating price war.
The projection, contained in OPEC’s closely watched monthly oil market report, follows the International Energy Agency’s analysis released Monday that forecast a contraction in global demand for 2020 of 90,000 bpd — which would be the first shrinkage in consumption since the financial crisis in 2009.
OPEC estimated that total global oil demand will come in at 99.73 million b/d in 2020, with the second half of the year expected to see higher consumption than the first half, according to S&P Global Platts.
“Considering the latest developments, downward risks currently outweigh any positive indicators and suggest further likely downward revisions in oil demand growth, should the current status persist,” it said.
Crude production from outside of OPEC will rise by 1.76 million bpd year-on-year to 66.75 million bpd in 2020, the report said.
With OPEC expected to produce 4.83 million bpd of NGLs in 2020, the so-called call on OPEC crude will average 28.18 million bpd, the report estimated.
That is 1.7 million bpd lower than last year, but above the 27.77 million bpd that OPEC pumped in February, according to the secondary sources used by the organisation to track output. The February figure is the lowest level that OPEC has produced since January 2004.
Key members Saudi Arabia and the UAE have announced in the past few days plans to significantly ramp up their crude supplies to the market in April, once the OPEC+ alliance’s production quotas expire at the end of March.
Russia, the main non-OPEC partner in the coalition, has also said it could raise its output by 200,000 to 300,000 bpd in the short-term.
The expected flood of supplies has tanked oil prices — which OPEC lamented in its report.
“The recent decline in oil price could not have happened at a worse time, as the COVID-19 outbreak has wiped out global oil demand growth for 2020 and caused a strong negative global economic impact, which is expected to continue and worsen if the virus is not controlled,” it said.
But it warned that high-priced production in unconventional reservoirs, in countries such as the US and Canada, would see their output impacted the most.