Opec says coronavirus to trim 2020 oil demand as it weighs deeper cut

[LONDON] Opec on Wednesday cut its forecast for global growth in oil demand this year due to the coronavirus outbreak and said its output fell sharply in January as producers implemented a new supply-limiting pact.

In a monthly report, Opec said 2020 demand for its crude will average 29.30 million barrels per day (bpd), 200,000 bpd less than previously thought.

Opec pumped less oil in January than the average 2020 requirement, due to planned cuts and involuntary losses.

The report could bolster the case for even more supply curbs by the Organisation of the Petroleum Exporting Countries, which is considering whether to curb output further to offset slower demand.

Oil has fallen 17 per cent this year to US$55 a barrel, alarming producers.

"The impact of the coronavirus outbreak on China's economy has added to the uncertainties surrounding global economic growth in 2020, and by extension global oil demand growth," Opec said in the report.

"Clearly, the ongoing developments in China require continuous monitoring and assessment."

In the report, Opec said world oil demand was expected to rise by 990,000 bpd this year, a cut of 230,000 bpd from its previous forecast, following downward revisions by other forecasters such as the US government's Energy Information Administration.

Opec, Russia and other producers, a group known as Opec+, have since Jan 1 implemented a deal to cut output by 1.7 million bpd to support the market.

A technical panel that advises Opec+ proposed last week a new cut of around 600,000 bpd. The producers are also considering moving their next policy meeting ahead to February from March 5-6, although they have yet to make a decision.

In January, Opec over-delivered on its cuts, lowering supply by 509,000 bpd to 28.86 million bpd according to secondary sources cited in the report, due to involuntary losses in Libya as well as deliberate cuts.

REUTERS