Opec cuts oil demand growth forecast on coronavirus

Opec has revised down its forecast for 2020 global oil demand growth to reflect the impact of the Chinese coronavirus outbreak on consumption.

In its latest Monthly Oil Market Report (MOMR), Opec has cut its projection for demand growth this year by 230,000 b/d from its previous forecast, to 990,000 b/d.

"The coronavirus outbreak in China and its impact on transportation and industrial fuels in China and other regions accounted for most of the downward revision," the report said. Opec now expects global consumption to average 100.73mn b/d in 2020, with demand higher in the second half of the year than in the first.

The revision is slightly steeper than the cut to demand growth assumed by the Joint Technical Committee (JTC) of Opec and allied non-Opec producers when it met last week to assess the impact of the coronavirus. The JTC has recommended that Opec and its non-Opec partners extend their current production quotas to the end of 2020 but cut output by an additional 600,000 b/d in the second quarter. The proposal awaits Russia's endorsement.

Opec has lowered the forecast call on its own crude by about 200,000 b/d from its previous report to 29.3mn b/d for this year. Citing secondary sources, including Argus, Opec crude production fell by 509,000 b/d to 28.86mn b/d in January compared with December, the MOMR said.

Opec has also trimmed its projection for 2020 non-Opec supply growth by 100,000 b/d to 2.25mn b/d, with a downward revision to US production growth partially offset by upward adjustments in other regions. Opec still expects the US to be the main growth driver this year, along with Norway, Brazil, Canada, Guyana and Australia.

By Rowena Edwards