Global oil demand is assumed at 99.73 mb/d in 2020, but the second half of 2020 is expected to see higher consumption than the first half of the year, according to the Monthly Oil Market Report issued by the Organisation of the Petroleum Exporting Countries (OPEC) on Wednesday.
Considering the latest developments, the report noted, downward risks currently outweigh any positive indicators and suggest further likely decline revisions in oil demand growth, should the current status persist.
It added that world oil demand growth in 2020 is witnessing a decline from 0.92 mb/d to 0.06 mb/d, reflecting slower global economic growth associated with a wider spread of novel Covid-19 beyond China.
“The impact of the Covid-19 outbreak in China and its adverse impacts on transportation and industrial fuels were the main causes of this downward revision. In addition, the outbreak is also assumed to severely affect oil demand growth in various other countries and regions outside China, such as Japan, South Korea, OECD Europe and the Middle East, which has led to a downward revision in those regions as well,” reads the report.
The report also said that global oil demand growth in 2019 is revised down by 0.08 mb/d to 0.83 mb/d from the previous month’s assessment.
For global oil supply in 2020, the report said that Non-OPEC oil supply growth is projected to decline by 0.49 mb/d to 1.76 mb/d.
“Production is revised up mainly for Russia, Thailand, Indonesia and Oman, while the US, China, Mexico, Colombia, Norway, Azerbaijan and Malaysia are revised lower. US liquids production growth in 2020 is revised down by 0.36 mb/d to 0.90 mb/d, y-o-y. Yet, the US is forecast to drive growth throughout the year, along with Brazil, Norway,Canada, Guyana and Australia,” the report expected.
It also expected that Mexico, Colombia, Egypt and China are to see the largest declines.
According the report, demand for OPEC crude in 2020 is expected at 28.2 mb/d, around 1.7 mb/d lower than the 2019 level.
Regarding the world economy, the report said that following a marked weaker economic growth for the second half of 2019 in Japan, the Euro-zone and in India, the Covid-19 related developments necessitated a further downward revision of the 2020 GDP growth forecast to 2.4 percent from 3.0 percent forecast in February.
US growth remains at 2.3 percent for 2019 but is revised down to 1.6 percent for 2020 due to an anticipated slowdown in consumption amid rising uncertainties, triggered by declining asset markets, according the report.
“Euro-zone growth remains at 1.2 percent for 2019, but is lowered to 0.6 percent for 2020, mainly due to the expectation of reduced exports, slowing consumption in select Euro-zone economies and the drastic development seen in Italy."
For China, 2020 economic growth expected to drop to 5 percent, considering the latest Covid-19 impacts, while Russia's economic growth is expected to decline to 0.8 percent, down from 1.1 percent in 2019, impacted by the decline in commodity export markets.
“Further downside risks to the world economy remains given the uncertainty regarding the magnitude of Covid-19 related impacts,” the report highlighted.