with agency report
Lagos — A Reuters poll has indicated a slowdown in global demand for crude oil in 2020 as a result of continuous spread of the Coronavirus, which in turn will cast a shadow over OPEC’s effort to cut output and shove up prices.
The survey of 42 economists and analysts forecast Brent crude would average $60.63 a barrel in 2020, down about 5% from the previous month’s $63.48 projection.
Of the 37 contributors who participated in both the January and February polls, 25 cut their 2020 Brent forecasts.
The global benchmark has averaged $59.80 so far this year.
Oil has shed nearly 30% from January highs, with U.S. crude dropping below $50 a barrel after the virus hit demand in China, the world’s top oil importer, and sparked concerns about excess global supply.
“In the first quarter, we expect economic disruptions caused by the outbreak to weigh heavily on oil demand and prices,” Capital Economics analyst Caroline Bain said.
Analysts have said even further production cut by the Organisation for the Petroleum Exporting Countries and its partners would do little to cushion effect of the virus on the market. They expect global oil demand to grow by about 0.7-1.1 million barrels per day (bpd) this year, compared with last month’s prediction of 0.8-1.5 million bpd.
The U.S. Energy Information Administration lowered its 2020 demand growth forecast to 1 million bpd from 1.3 million bpd.
“Demand growth is likely to take a hit from the impact on transportation from the epidemic and a milder winter. This will likely result in an oversupplied oil market in Q1,” UBS analyst Giovanni Staunovo said.
Oil could stage a slight recovery, especially towards the second half of 2020, although that would be contingent on how fast the virus situation eases, analysts said.
“Prices could recover ground over the next months driven by OPEC+ commitment to maintaining global markets close to balance, the threat of U.S. sanctions against Russian crude producers and persisting supply disruptions in several countries, including Libya,” Intesa Sanpaolo analyst Daniela Corsini said.