Global oil demand expected to decline by 6.4 mb/d in second half of 2020 – OPEC
By Ikenna Omeje
The Organization of Petroleum Exporting Countries (OPEC) has said that Global oil demand is expected to decline by 6.4 million barrels per day (mb/d) in the second half of 2020 (2H20), compared with a decline of 11.9 mb/d in the first half (1H20) of the year.
According to the OPEC Monthly Oil Market Report for June, aviation fuel is anticipated to continue facing low demand, as national and international flights are expected to only slowly recover, while teleworking/teleconferencing is aiding decline in business travel.
OPEC said: “World oil demand is anticipated to decline by 6.4 mb/d in 2H20 compared with a decline of 11.9 mb/d in 1H20, with a gradual recovery projected until the end of 2020. Transportation fuels are forecast to remain under pressure in 2H20, despite ongoing easing in lockdown measures. Aviation fuel is expected to continue facing challenges, as national and international flights are anticipated to only slowly recover, while teleworking/teleconferencing restricts business travel. Gasoline consumption will also be restrained due to high unemployment in the US and reduced commuting. In addition, industrial fuels continue impacting global weakness in manufacturing activities. Overall, oil demand in all regions is forecast to contract by 6.4 mb/d in 2H20, Mostly in OECD Americas and Europe.”
The largest Global oil cartel said that oil supply is expected to drop by 4.3 mb/d, compared to the first half of 2020 and drop by 6.1 mb/d compared with second half of 2019 (2H19). It said that Non-OPEC supply growth in first half of the year is estimated to have slowed by 1.8 mb/d compared with second half of 2019, due to production outages of 5.1 mb/d in 2Q20.
OPEC noted that the expected decrease in supply is not just because of production cuts agreed by the non- OPEC countries participating in the Declaration of Cooperation (DoC), but also because of production curtailments by North American producers and, to some extent, in Brazil and Norway.
“Non-OPEC oil supply in 2H20 is forecast to decrease by 4.3 mb/d, compared to 1H20, and drop by 6.1 mb/d compared with 2H19. Non-OPEC supply growth in 1H20 is estimated to have slowed by 1.8 mb/d compared with 2H19, due to production outages of 5.1 mb/d in 2Q20. These outages are not only due to production adjustments agreed by the non-OPEC countries participating in the DoC, but also due to production curtailments by North American producers and, to some extent, in Brazil and Norway. Production outages are expected to extend into 2H20, with the largest declines expected in the US and Canada by a combined 2.8 mb/d, while output of the 10 non-OPEC participants in the DoC is forecast to drop by 1.7 mb/d.”