An oil tanker freight train passes towards Nizamuddin Railway Station near the Ashram in New Delhi on July 30, 2020.
Mayank Makhija | NurPhoto via Getty Images
LONDON – OPEC cut its forecast for oil demand growth this year, citing a weaker-than-expected recovery in India and other Asian countries, and warning that risks remain “high and downward”
In a carefully followed monthly report released on Monday, the group of oil-producing nations downgraded its outlook for global oil demand to an average of 90.2 million barrels per day in 2020. 400,000 barrels per day compared to the previous month’s estimate and reflects a decline of 9.5 million barrels per day on an annual basis.
The report comes as energy market participants become increasingly concerned about a faltering economic recovery and stumbling fuel demand in the wake of the coronavirus pandemic.
The Middle East-dominated group, made up of some of the world’s largest oil producers, said on Monday it had revised oil demand in OECD countries by about 100,000 barrels per day due to lower-than-expected falls in all sub-regions during the second. quarter.
However, oil demand was revised down by 500,000 barrels per day in the non-OECD region due to weak oil demand performance in Asia, particularly India.
Looking ahead, OPEC said the negative impact on Asia’s oil demand is expected to persist for the first six months of 2021.
“Furthermore, the risks remain high and skewed to the downside, particularly in relation to the development of Covid-19 infection cases and potential vaccines,” the group said in the report.
“Furthermore, the speed of economic activity recovery and the growth potential of oil demand in other Asian countries, including India, remain uncertain,” he added.
Therefore, OPEC now expects global oil demand to grow by 6.6 million barrels per day, reaching an average of 96.9 million barrels per day next year. This updated forecast was also 400,000 bpd lower than the previous estimate.
The international benchmark Brent crude was trading at $ 39.76 a barrel on Monday, down about 0.2%, while the US’s West Texas Intermediate (WTI) traded at $ 37.26, around 0. , 1% less.
Oil prices have dropped around 40% since the start of the year.
Sad growth in oil demand
On the occasion of the group’s 60th anniversary, OPEC Secretary General Mohammad Barkindo said Monday that the coronavirus pandemic was “one of the greatest global challenges of modern times”.
“Beyond the terrible human suffering it caused, it triggered one of the worst global economic downturns and oil market recessions in OPEC history,” he added.
OPEC, along with non-OPEC allies, a group collectively known as OPEC +, will meet on September 17 to discuss oil production policy. The energy alliance has decided to cut production by 7.7 million barrels per day until December.
“Infection rates are on the rise again, there are localized blockages introduced in an increasing number of countries that hinder regional economic growth, and the number of unemployed is not significantly decreasing,” Tamas Varga, an analyst, said in research. senior of PVM Oil Associates. note published Monday.
“This leads to sad growth in oil demand, as highlighted in last week’s weekly and monthly EIA report.”
Earlier this month, the US Energy Information Administration cut its forecast for global demand growth for 2021 by 500,000 bpd on the basis of lower expected consumption growth in China.