Rystad Slashes Oil Demand Growth Forecast
Rystad Energy revealed Tuesday that it has slashed its global oil demand growth forecast for 2020 by 25 percent after assessing the impact of the coronavirus.
The company now sees demand growing by 820,000 barrels per day (bpd) this year, compared to its previous forecast of 1.1. million bpd, which was published in December before the virus outbreak.
Rystad has warned, however, that the virus’ impact on demand could be even bigger and revealed that its worst-case scenario sees growth plunging to 650,000 bpd year on year.
“Our current assessment implies that the impact of coronavirus will persist throughout all of February and March and will then gradually subside towards June 2020,” Bjornar Tonhaugen, Rystad Energy’s senior vice president and head of oil markets, said in a company statement.
“We hence expect travel restrictions and extended holidays in China to significantly impair demand in 1Q20 and partially in 2Q20. Demand is forecast to start recovering in April and May,” he added.
On December 31, 2019, the World Health Organization (WHO) was alerted to several cases of pneumonia in Wuhan City, Hubei Province of China. On January 7, Chinese authorities confirmed that they had identified a new virus. The new virus is a coronavirus, according to WHO, which is a family of viruses that include the common cold, SARS and MERS.
Following the outbreak, Fitch Solutions Macro Research (FSMR) revised down its Brent oil price forecast for 2020. FSMR now sees Brent averaging $62 per barrel this year, which marks a $3 drop compared to its previous forecast in January.
“An already bearish outlook for Chinese demand in 2020 looks set to worsen, compelling us to revise down our 2020 price forecast,” FMSR said in a report which was sent to Rigzone earlier this month.
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