IEA: Oil Demand Growth Estimates Lurching Lower

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The International Energy Agency lowered its estimate of global oil demand growth next year, as well as the “call” for OPEC crude in the first half, on the back of reduced expectations for the global economy, reports Platts.

Sharp downgrades in GDP

In its monthly oil market report, the IEA cut its 2020 demand growth estimate to 1.2 million b/d, from 1.3 million b/d.

This is largely in response to sharp downgrades to GDP growth this year and next by the Paris-based Organisation for Economic Cooperation and Development on September 19, in turn reflecting trade disputes, reduced investment growth, and Brexit uncertainties.

Bunker fuel influencing OECD demand

It added that demand in the OECD developed countries might also have been affected by bunker fuel traders clearing out stocks ahead of new regulations on sulfur levels in bunker fuel, creating some scope for a bounce-back.

Reflecting lower demand expectations, the IEA also cut its estimate of the “call” on OPEC, or need for OPEC crude, for the first half of next year to 28.2 million b/d, compared with its previous estimates of 28.3 million b/d in the first quarter and 28.4 million b/d in the second quarter.

Drop in non-OPEC supply growth

On the supply side, the IEA reduced its estimate of non-OPEC supply growth in both 2019 and 2020 to 1.8 million b/d and 2.2 million b/d respectively, compared with its previous estimates of 1.9 million b/d in 2019 and 2.3 million b/d in 2020, reflecting slightly reduced expectations for the US.

  • Saudi crude output had reached 10 million b/d by the end of September, after a missile attack curbed production on September 14, and that level “is expected to be sustained through October.”
  • Venezuela’s oil production decline accelerated in September, falling by 150,000 b/d on the month to 650,000 b/d, it said, adding that “further losses are likely in the months ahead due to ongoing operational difficulties and the pressure of sanctions.”

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Source: Platts

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