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Coronavirus prompts OPEC to cut forecast for 2020 oil demand growth

By Amanda Cooper

Oil export group revises down outlook for 2020 consumption

Oil demand growth this year will decline more sharply than previously expected, in large part because of the coronavirus that has already hit Chinese consumption, according to the Organisation of the Petroleum Exporting Countries (OPEC).

In its monthly market report, OPEC said it had cut its forecast for oil demand growth in 2020 by 230,000 barrels per day from its January estimate to 990,000 bpd.

“The outbreak of the coronavirus in China during 1H20 is the major factor behind this downward revision,” OPEC said.

The virus, a respiratory infection, has killed more than 1,000 people and infected tens of thousands of others around the world since erupting in central China in December.

OPEC has already agreed to cut output by a joint 1.7 million bpd this year, together with partner nations such as Russia, to help avoid a build-up in unused fuel inventories that will ultimately undermine prices.

According to Reuters reports, most OPEC+ nations are in favour of an additional cut of 600,000 bpd, but Russia has delayed delivering its official stance, to the frustration of some OPEC members.

Demand for OPEC’s own crude is expected to decline to 29.3 million bpd this year, marking a 200,000-bpd revision from last month’s estimate and down from 2019’s 30.6 million bpd, the report showed.

“The main reason behind the oil demand growth revision and hence the demand for OPEC crude, is the outbreak of the coronavirus and its expected impact on China’s oil demand and, by extension, global oil demand,” OPEC said.

In contrast, production from outside OPEC is expected to grow faster than global supply, according to the report. OPEC expects non-OPEC crude output to grow by 2.25 million bpd this year, more than outstripping the pace of growth in consumption.

Most new supply is expected to come from the United States, Norway, Brazil, Canada and Guyana.

FURTHER READING: Global demand for oil will peak in the next 20 years

FURTHER READING: Oil price forecast for February 2020

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