OPEC, EIA chop oil demand forecast

PARIS: OPEC and EIA chopped yesterday its forecast for oil demand this year on the impact of the coronavirus impact and warned it may do so again. In its latest monthly report the Organization of Petroleum Exporting Countries lowered its forecast for global average daily demand by 0.92 million barrels to 99.73 million barrels.

That sees average daily global demand still rising by 60,000 barrels per day, but OPEC said: “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.”

The outbreak of the new coronavirus has already caused massive economic disruption in China and beyond as authorities impose measures to try to contain its spread, hitting demand for oil. Oil markets have also been roiled by an escalating price war led by Saudi Arabia against Russia.

Last week, Russia rejected a Saudiled proposal to deepen production cuts to support oil prices as demand falls. In response, Saudi Arabia announced discounts and production increases, leading to steep falls in oil prices on international markets. Meanwhile, Global oil demand is expected to dive by 910,000 barrels per day (bpd) in the first quarter, the US Energy Information Administration (EIA) said yesterday, as the rapid spread of coronavirus has slammed economic activity and travel, raising the specter of a global recession.

Oil prices plunged by the most in nearly three decades on Monday as top producers Saudi Arabia and Russia began a price war that threatens to overwhelm global oil markets with supply even as demand has slid. For the first quarter, EIA expects world crude oil and liquid fuels consumption to drop by 910,000 bpd from a year earlier to 99.06 million bpd. —Reuters