OPEC on Thursday again cut its forecast for 2020 global oil demand due to the “historic shock” delivered by the coronavirus outbreak, and said the reduction may not be the last.
The Organization of the Petroleum Exporting Countries now expects global demand to contract by 6.9 million barrels per day, or 6.9 percent, in 2020, it said in a monthly report. Last month, OPEC expected a small increase in demand of 60,000 bpd.
“The oil market is currently undergoing historic shock that is abrupt, extreme and at global scale,” OPEC said in the report.
“Downward risks remain significant, suggesting the possibility of further adjustments, especially in the second quarter,” OPEC said of the demand forecast.
Oil has collapsed in 2020 due to the slide in demand, falling to an 18-year low of $21.65 a barrel on March 30. To try to shore up the market, OPEC, Russia and other producing nations have agreed to a record supply-cut pact.
OPEC expects the drop in demand this month to be the largest, seeing a contraction of 20 million bpd. Crude was trading just above $28 a barrel after the release of the OPEC report, paring an earlier gain.
Even so, OPEC expects a smaller near-term impact on demand than the International Energy Agency, which on Wednesday forecast a 29 million bpd dive in April oil demand to levels not seen in 25 years.