An oil tanker cargo train passes towards the Nizamuddin railway station near the Ashram in New Delhi on July 30, 2020.
Mayank Mahija | NurPhoto via Getty Images
LONDON – OPEC cut its forecast for oil demand growth this year, citing weaker-than-expected recovery in India and other Asian countries, and warned that risks in the first half of next year would remain “elevated and downward-biased.”
In a closely monitored monthly report released on Monday, a group of oil-producing countries revised down their forecast for global oil demand to an average of 90.2 million barrels per day in 2020. This is 400,000 barrels per day lower than the previous month’s estimate and reflects a decrease of 9.5 million barrels per day compared to the same period last year.
The report comes out as energy market participants are increasingly concerned about the slowing economic recovery and falling fuel demand due to the coronavirus pandemic.
The Middle East-dominated group, which includes some of the world’s largest oil producers, said on Monday that it revised oil demand in OECD countries by about 100,000 barrels per day due to less expected declines in all sub-regions during the second period. quarter.
However, oil demand was revised by 500,000 barrels per day in non-OECD countries due to weaker oil demand in Asia, especially India.
Looking ahead, OPEC said the negative impact on oil demand in Asia is expected to continue through the first six months of 2021.
“In addition, the risks remain elevated and reversed, especially with regard to the development of Covid-19 infections and potential vaccines,” the group said.
Moreover, the speed of economic recovery and the growth potential for oil demand in other Asian countries, including India, remain uncertain, ”the company added.
Thus, OPEC now expects global oil demand to grow by 6.6 million barrels per day to an average of 96.9 million barrels per day next year. This updated forecast was also 400,000 barrels per day lower than its previous estimate.
International benchmark Brent oil was trading at $ 39.76 a barrel on Monday, down about 0.2%, while West Texas Intermediate (US) (WTI) amounted to $ 37.26, which is about 0.1% lower.
Since the beginning of the year, oil prices have fallen by about 40%.
Gloomy rise in oil demand
Celebrating the group’s 60th anniversary, OPEC Secretary General Mohammad Barkindo said on Monday that the coronavirus pandemic is “one of the greatest global challenges of our time.”
“In addition to the terrible human suffering he caused, he triggered one of the worst global economic recessions and oil market downturns in OPEC history,” he added.
OPEC, together with its non-OPEC allies, a group known collectively as OPEC +, will meet on September 17 to discuss oil policy. Energy Alliance agreed to cut production by 7.7 million barrels per day until December.
“Infection rates are on the rise again, more and more countries are imposing local lockdowns that impede regional economic growth, and the number of unemployed cannot significantly decrease,” said Tamas Varga, senior analyst at PVM Oil Associates. Note published on Monday.
“This is driving a dismal rise in oil demand, as reflected in the EIA’s weekly and monthly reports over the past week.”
Earlier this month, the US Energy Information Administration lowered its forecast for global demand growth for 2021 by 500,000 barrels per day due to lower projected growth in consumption in China.
