Lower economic activity levels will see oil demand dropping by 9.1 million barrels per day according to OPEC’s latest monthly report, as the group raised its number on demand fall compared to last month.
“World oil demand in 2020 is estimated to decrease by 9.1 million b/d, adjusted lower by around 0.1 mb/d as compared to last month’s assessment. The downward revision is mainly to reflect weaker-than-expected data in 2Q20 (second quarter) in a few non-OECD countries, in addition to considering the recent adjustment to global GDP in 2020 from -3.7 per cent in July to -4.0 per cent in August,” the report noted.
“Oil demand growth in the non-OECD was revised lower by 0.2 mb/d in 2020, more than offsetting the upward adjustment in OECD, mainly accounting for weaker-than-expected demand in the other Asia region during 1H20 (first half of 2020) and reflecting softening economic activities as compared to last month,” the report added, stating that oil demand for this year would reach 90.6 million barrels a day.
Oil prices on Wednesday saw Brent on $45.03 and West Texas Intermediate at $42.16 in the late UAE afternoon hours, as prices continued to remain stable in the low to mid $40 range.
Looking ahead, OPEC said oil markets still faced volatility in the second half of the year as a result of the coronavirus, which would require producing member states to continue rebalancing the market.
“Crude and product price developments in 2H20 will continue to be impacted by concerns over a second wave of infections and higher global stocks.
“Product inventories may remain elevated due to the weak road and air transport fuel demand… This points to the need for continued efforts to support market rebalancing both on the supply side through production adjustments by Opec and non-OPEC producers.”