News wire — U.S. investment bank Goldman Sachs lowered its oil demand forecast for China for the next two months, citing rising concerns over the impact of the next wave of COVID-19 infections.
The Wall Street bank, which had already cut expectations last month for emerging market demand because of the Delta variant, now expects a demand hit of a million barrels per day (bpd) in China, it said in a note on Tuesday.
However, the bank said the net impact from Delta on its global oil demand forecast remained moderate and lowered demand forecast for next two months to 97.8 million bpd from 98.4 million bpd realized in July.
China’s latest surge of COVID-19 cases entered its fourth week with the highly infectious Delta variant detected in more than a dozen cities since July 20.
Oil prices dipped on Wednesday as analysts cut forecasts for fuel demand in China following mobility curbs over the spread of coronavirus, offsetting a bullish outlook for U.S. fuel demand.
“The base case remains that the Delta wave will impact demand, including in China, for only two months, consistent with prior cycles, including most recently in India,” Goldman said, adding that oil demand in the European Union, Latin America and India was moving to the upside.
The bank reiterated that the markets’ bullish impulse was shifting to supply from demand, as it expects a July output ramp-up by the Organization of the Petroleum Exporting Countries and allied nations (OPEC+) to fall short of expectations.
Goldman projects the oil market deficit to shrink to 1 million bpd in coming weeks as the Delta impacts peak, but expects the demand hit to be transient while supply shortfalls persist.
- Reuters (Reporting by Seher Dareen and Arundhati Sarkar in Bengaluru; Editing by Clarence Fernandez)