The Organization of the Petroleum Exporting Countries (OPEC) said that the world oil demand will fall by 9.1 million barrels per day this year, more than the 8.95 million barrels per day decline expected a month ago.
This was included in a monthly report released yesterday which showed an extension in the fall of demand by 100,000 a day from its July forecast due mainly to lower economic activity levels in developing economies.
The cartel, however, noted that demand in 2021 is expected to rise by 7 million barrels a day, unchanged from its July forecast.
On the supply side, OPEC revised up its forecast for 2020 non-OPEC liquids production growth by 235,000 barrels a day due to a better-than-expected recovery in the second half, leaving output on track for a 3.03 million barrel a day decline year over year.
As a result of the bearish forecast, the price of OPEC basket of 13 crudes dropped to $45.08 a barrel on Wednesday, compared with $45.21 recorded at the previous day, according to OPEC Secretariat calculations released on Thursday.
The OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Djeno (Congo), Zafiro (Equatorial Guinea), Rabi Light (Gabon), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).
The indication from the latest data showed that world oil demand will fall more steeply in 2020 than previously forecasted due to the coronavirus and there are doubts about next year’s recovery.
This overtook news of a drop in crude inventories in the US which would normally have lifted prices.
According to the Energy Information Administration (EIA), crude inventories fell by 4.5 million barrels in the last one week, compared with analysts’ expectations for a 2.9-million-barrel drop.
In addition, US fuel demand rose to 19.37 million barrels per day last week, the highest since March while crude output dropped to 10.7 million barrels per day from 11 million barrels per day.
Support would also have come from the forecast that US crude production is projected to drop by 990,000 barrels a day this year to 11.26 million barrels daily steeper than the 600,000 barrels per day decline it forecast last month.
However, increasing uncertainty over a stalemate in Washington on a stimulus package to support recovery from the coronavirus pandemic weighed on prices, analysts said.
