Opec blames coronavirus as its cuts forecasts for oil demand

(Sharecast News) - Opec has cut its forecasts for oil demand in 2020, over concerns that the coronavirus outbreak will weigh heavily on the global economy.

In its closely-watched monthly oil market report, published on Wednesday, the cartel cut both its predictions for global economic growth and oil demand.

It predicted global oil demand would grow by 990,000 barrels per day in 2020, a downward revision of 230,000 bpd on its January forecast, while its global economic growth forecast for 2020 was lowered by 0.1 percentage points to 3.0%.

"Oil demand growth in China in 2020 is forecast to slow down, year-on-year, reflecting lower economic activities," Opec said. "The recent outbreak of the coronavirus in China necessitate a further downward revision to the country's oil demand growth forecast compared to last month, as transportation fuels, notably aviation fuels, are expected to be impacted in the first half."

Chinese oil demand was revised down by 200,000 bpd in the first half, with economic growth in the country now slated to reach 5.4% by the end of the year, a 0.5 percentage point reduction.

"The impact of the coronavirus outbreak on China's economy has added to the uncertainties surrounding global economic growth in 2020, and by extension global oil demand growth in 2020," Opec added.

"Clearly, the ongoing developments in China require continuous monitoring and assessment to gauge the implications on the oil market in 2020."

Opec and its allies, which include Russia, last month agreed a deal to curb output by 1.7m bpd, and February's report will further fuel speculation supplies might be cut further to offset weakening global demand. As at 1345 GMT, both WTI and Brent futures were trading higher, at $51.05 a barrel and $55.44 a barrel respectively.

The Organization of Petroleum Exporting Countries is based in Vienna. Members include Nigeria, Iraq and Saudi Arabia, its de-facto leader.