BAKU, Azerbaijan, Jan. 8
By Leman Zeynalova - Trend:
Globally, the oil demand outlook is improving and Fitch Solutions Macro Research (a unit of Fitch Group) forecasts stronger growth in 2020 than 2019, Trend reports citing Fitch Solutions Macro Research (a unit of Fitch Group).
“The collapse in oil demand growth last year was steeper than the slowdown in the global economy. In part this reflects a shift in the make-up of that growth, as (more energy-intensive) manufacturing activity slumped, while the services sector showed signs of resilience. Manufacturing activity looks set to stabilize, although prospects for a meaningful revival are slim,” reads a report released by Fitch Solutions.
Oil demand has faced a number of more localized drags at the individual market level, including the impacts of US sanctions, elections, fiscal reforms and broader policy uncertainties, said the company.
“In most key markets these headwinds will fade, improving the prospects for demand. Developed markets, which have enjoyed some cyclical boosts to growth in recent years are slipping back into structural decline, but this will be increasingly offset by stronger consumption in Ems. Limiting the upside to both global demand and oil prices is a mixed outlook on economic growth in China and India, the two dominant EM consumers. India faces significant strains on its financial sector, while a slowdown in private consumption and weak investment levels are dragging on the real economy.”
The Chinese economy – which was already struggling under deleveraging efforts and Beijing’s wider reform push – has taken a further hit from its dispute with the US, which dragged heavily on net exports and domestic investment.
“Easing trade tensions and looser fiscal and monetary policy will help prop up economic activity and oil demand in these markets next year, but growth will remain stunted in historical terms.
Crude demand growth may prove stronger than fuels demand growth. The implementation of IMO 2020 , which is currently catalyzing a major shakeup of marine fuels consumption, holds some upside should refiners need to raise throughput to meet the altered demand slate, although implementation is in full swing , which show few signs of a major dislocation in the market as of yet.”
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