Barclays expects crude oil demand this year to rise by 1.4 million bpd, up from 900,000 bpd last year, thanks to the improved global economy outlook, Reuters reports, citing the bank.
The new forecast is an upward revision of 500,000 bpd from Barclays' previous oil demand prediction.
In a note, Barclays said India will be the biggest driver of this heightened demand growth, followed by other Asian nations and countries in Latin America. Demand in the United States and China will also improve following the signing of the Phase 1 trade deal between the two.
Barclays' forecast comes on the heels of an International Monetary Fund update on its global economy outlook, which sees the world's economy growing by 3.3 percent this year, up from an estimated 2.9 percent in 2019. This is a downward revision of 0.1 percent, which the Fund said was due to a downward revision in India's economic growth outlook for this year.
Yet this expectation of a slowdown in India's growth seems likely to be offset by the improved investment environment after the "ceasefire" between Washington and Beijing, according to Barclays.
"Recent signing of the Phase 1 trade deal between the U.S. and China will likely boost investment confidence and will likely lead to increased activity growth," the bank said.
Regarding supply, however, there is some uncertainty surrounding OPEC+ and its production cut deal.
"These are unchartered territories for oil markets, which have gotten used to more visibility on the group's output and a close to unconditional resolve by a key member, Saudi Arabia, to keep the markets balanced," Barclays said in the note, referring to the next meeting of the partners, to take place in March.
Interestingly enough, the IMF cut Saudi Arabia's economic growth outlook for 2020 precisely because of the Kingdom's resolve to keep cutting production for as long as it needs to.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
Comments
China’s economy and India’s will lead the demand for oil with China’s oil imports projected to exceed the 11.76 mbd they hit in the last quarter of 2019.
A continued improvement in the trade relations between the US and China will stimulate global economic growth, enhance global demand for oil and accelerate the depletion of the glut in the market thus pushing oil prices up to $73-$75 in 2020.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
I enjoy your inputs. Thanks.