The US Energy Information Administration cut its global oil demand growth forecast for 2020 by 310,000 barrels per day (bpd) as the coronavirus outbreak impedes oil consumption in China, the world’s second biggest economy.
Namely, the agency reduced its estimate for global demand in 2020 to an increase of 1.03 million bpd to 101.74 million bpd, according to Reuters.
The new coronavirus has cost the lives of 1,116 people, with confirmed cases exceeding 45,000, and has adversely affected global financial markets.
Now, China’s foremost medical adviser on the epidemic said infections may be over by April.
In this regard, EIA expects that travel restrictions, mixed with the related economic slowdown in China, will reduce petroleum demand and keep crude oil prices below $60 per barrel through the first half of 2020, despite current disruptions to crude oil supply, EIA Administrator Linda Capuano explained.
Meanwhile, the cut in global demand growth reflects warmer-than-normal January temperatures across much of the northern hemisphere, EIA noted.
The EIA also cut its growth forecast for surging US crude output, which has helped make the US the world’s biggest oil producer, overtaking Saudi Arabia and Russia.
US crude production is expected to rise by 960,000 bpd in 2020 to a record of 13.2 million bpd, below EIA’s previous forecast for a rise of 1.06 million bpd.
Output in 2021 is forecast to rise by 360,000 bpd to 13.56 million bpd.
The rate of growth is expected to slow into next year as US oil producers follow through on plans to slash spending on new drilling for a second year in a row in 2020.
The agency expects U.S. petroleum demand to climb 90,000 bpd to 20.53 million bpd in 2020, below its previous forecast for a rise of 160,000 bpd to 20.64 million bpd.