1. China and India drive oil demand
- The story of oil demand growth is really a story about Chin and India. Together, they account for more than half of global demand growth.
- China’s oil consumption is expected to grow by 440,000 bpd this year, slower than the 615,000 bpd from last year, according to IEA data that also includes petroleum products.
- India has undershot forecasts in the last few years. Demand grew by 155,000 bpd in 2019 and is expected to grow by 170,000 bpd this year.
- Total non-OECD demand growth is estimated at 920,000 bpd this year, which will account for the lion’s share of the 1.2-mb/d of total global demand growth.
2. Coronavirus drags down commodity prices
- Global supply outages are no longer affecting commodity prices. “Concerns about demand have definitely gained the upper hand, and are being fed by the further spread of the coronavirus in China, where the number of those infected and deaths continues to rise,” Commerzbank wrote in a note.
- Beijing has put Wuhan, a city of 11 million people, on lock down. “Significantly less oil than usual may well be consumed during the upcoming week of New Year’s Festival celebrations in China. This is a period of particularly high demand because normally many Chinese travel during the holiday week,” Commerzbank said. “Consequently, the oversupply that is already in place on the oil market risks becoming…