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IEA cuts 2020 oil demand forecast on dimmer GDP outlook

IEA cuts 2020 oil demand forecast on dimmer GDP outlook

Mubasher: The International Energy Agency (IEA) on Friday downgraded its projections for global oil demand next year, citing gloomy growth outlook, according to energy information platform S&P Platts.

The IEA slashed its 2020 demand growth forecast to 1.2 million barrels per day (bpd), down from 1.3 million bpd, according to in its monthly oil report.

In response to sharp downward revisions to gross domestic product (GDP) this year and next by the Organisation for Economic Cooperation and Development (OECD), which cited trade disputes, reduced investment growth and Brexit uncertainty.

For the OECD developed countries, demand might have been impacted the most as bunker fuel traders clearing out stocks ahead of the new regulations on sulphur levels in bunker fuel, the energy watchdog said.

Reflecting lower demand forecasts, the IEA also lowered its estimate of the “call” on the Organization of the Petroleum Exporting Countries (OPEC), or the need for OPEC output, for the first half of next year to 28.2 million bpd, versus its previous estimates of 28.3 million bpd in the first quarter and 28.4 million the second.

The Paris-headquartered agency also estimated non-OPEC supply to grow at 1.8 million bpd and 2.2 million bpd this year and next, respectively. This came lower than the previously expected 1.9 million bpd for this year and 2.3 million bpd in the next.

Saudi Arabia’s crude output totalled 10 million bpd by the end of September, after a drone attack on its oil installations, while such level will be maintained through this month.

In Latin America, Venezuela oil production declined faster in September, dropping by 150,000 bpd to 650,000 bpd.

“Further losses are likely in the months ahead due to ongoing operational difficulties and the pressure of [US] sanctions,” the IEA said.

By 10:58 am GMT, international benchmark Brent futures climbed by 1.51% to $59.99 per barrel (pb), while US Nymex crude futures jumped by 1.64% to $54.43 pb.