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Opec cuts 2020 oil demand further

VIENNA, August 12, 2020

The global oil demand is forecast to decline by 9.1 mbpd in 2020. This is 0.1 mbpd lower than last month’s forecast, mainly due to lower economic activity levels in a few major non-OECD countries, an Organization of the Petroleum Exporting Countries (Opec) forecast said on Wednesday.
 
On a quarterly basis, the more-than-expected decline in the non-OECD countries in the 2Q20 was partially counterbalanced by better-than-expected demand in OECD Europe, it said. 
 
The 2H20 is adjusted lower, compared to last month’s assessment, in line with the expected softer economic momentum, mainly in a few non-OECD countries. Total oil demand is now projected to reach 90.6 mbpd, Opec said. 
 
For 2021, world oil demand growth is forecast to rise by 7 mbpd, unchanged from last month. Total world consumption is now pegged at 97.6 mbpd in 2021. 
 
The forecast assumes that Covid-19 will largely be contained globally, with no further major disruptions to the global economy. Consequently, economic activities are projected to rebound steady in both OECD and non-OECD.
 
As a result, the OECD countries are expected to witness oil demand growth of 3.5 mbpd, y-o-y, in 2021. The non-OECD countries are expected to witness similar growth, with China and other Asia leading the gains.
 
Oil stocks have built up due to the demand collapse. Opec said inventories in developed nations rose in June to stand 291.2 million barrels above the five-year average, a yardstick that Opec before the pandemic saw as a desirable level.
 
Crude rose above $45 a barrel on Wednesday, but remains below levels that many Opec members need to balance their budgets.



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