BAKU, Azerbaijan, Feb.5
By Leman Zeynalova – Trend:
Wood Mackenzie has lowered its oil demand forecast for Q1 2020 by nearly 900,000 barrels per day (b/d) to 98.8 million b/d, Trend reports citing the company.
Much of the drop is attributable to efforts to contain the coronavirus outbreak, including flight cancellations.
Emerging in Wuhan, China, about a month ago, the virus has spread from about 300 people as of Jan. 21 to close to 21,000 and killed more than 420 — with the number of new cases growing by the thousands every day.
The near-term impact of the coronavirus outbreak on oil demand remains uncertain as much depends upon when and how China’s manufacturing industry restarts after the currently extended Lunar New Year public holiday, according to Wood Mackenzie.
Ann-Louise Hittle, Vice President, Macro Oils, said that the Q1 2020 fall in Chinese demand – a 200,000 b/d drop to 13 million b/d - is the first year-on-year decline in the country’s demand since 2009.
“OPEC is holding emergency talks to consider an additional 500,000 b/d cut, on top of its already agreed steep output quotas in a bid to balance the market and shore up crude prices. “It’s a dilemma for the group because the duration of the hit to oil demand – particularly from China, the world’s largest oil importer - is not clear,” she said.
Hittle believes that yet, without a further production cut, crude oil prices will remain under pressure and struggle to hold the mid-$50 per barrel price for Brent, let alone recover to above $60 per barrel before Q2 2020.
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