BAKU, Azerbaijan, Feb.11
By Leman Zeynalova – Trend:
Assessing the impact of the coronavirus, Rystad Energy, an independent energy research and business intelligence company, is heavily revising its annual global oil demand growth forecast down by 25 percent to 820,000 barrels per day (bpd) in 2020, Trend reports citing the company.
“Our previous growth forecast, published in December, before the coronavirus outbreak, stood at 1.1 million bpd. The coronavirus’ impact on demand growth could be even wider, however, slashing growth to as low as 650,000 bpd year on year (y/y) in our worst case scenario,” said the company.
Rystad Energy’s current assessment implies that the impact of coronavirus will persist throughout all of February and March and will then gradually subside towards June 2020.
“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,” said Bjornar Tonhaugen, Rystad Energy’s Senior Vice President, Head of Oil Markets.
The company now believes that the projected global oil demand growth in the first quarter will be almost entirely wiped out. Rystad Energy’s estimates show that demand will grow by only 0.1 million bpd, a steep decline from a previously projected y/y growth of 1.2 million bpd for 1Q20.
“Of the above, 0.9 million bpd of the growth’s decline is attributed to lower demand in China and 0.2 million bpd to the rest of the world. Overall, we expect Chinese demand to drop in 1Q20 by 0.3 million bpd y/y, instead of growing by a previously projected 0.6 million bpd. This will be the first quarterly y/y drop in seven years.”
Similarly, the rest of the world’s demand, excluding China, which had been projected to grow by 0.6 million bpd in 1Q, is now expected to grow by only 0.4 million bpd, said the company.
“We see an additional downside risk to short-term oil demand growth also from a macro-economic perspective as we continue to see weak economic indicators from India – one of the main engines of demand growth – along with weak European manufacturing PMIs. Consensus GDP forecasts have recently put Indian GDP growth at just 5 percent this year, 0.5 percentage points lower than in the previous forecast. European manufacturing PMIs remain at 46, well below the inflection point of 50.”
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