The OPEC+ group is sticking…
Though Oman is far from…
Morgan Stanley updated its oil demand forecast for this year, saying it expected it to be close to zero in China after the devastating coronavirus epidemic.
“We now expect China’s oil demand growth in 2020 to be close to zero, from already low pre-Covid-19 growth expectations of 350 kb/d,” the investment bank said in a note, as quoted by Reuters. “As Covid-19 has been spreading globally, demand outside China is likely to slow further.”
So, that’s a drop in demand growth of at least 350,000 bpd, which is generally in tune with the oil demand growth forecasts of the EIA, the IEA, and OPEC. All three last month revised their oil demand growth forecasts down, with the IEA being the most pessimistic, expecting a dip in oil demand in the first quarter, at 435,000 bpd, which would be the first demand contraction in a decade.
The EIA was also pessimistic, revising its outlook for oil demand by 378,000 bpd, noting that in China, oil demand growth could fall by 190,000 bpd because of the outbreak.
OPEC was most optimistic, expecting oil demand growth to be 230,000 bpd lower than its earlier forecast for 2020.
Morgan Stanley said it expected global oil demand this year to grow by a modest 500,000 bpd, which is a revision from 800,000 bpd. On the positive side, the bank also said it expected OPEC to announce additional cuts of 1 million bpd at this week’s meeting in Vienna, which would raise the total to 2.7 million bpd, and extend the cuts to the end of the year.
Unfortunately, even OPEC’s additional cuts won’t do much for prices, according to Morgan Stanley’s analysts, who said they expected Brent to stay range-bound within the $50s throughout the year.
The news that OPEC was considering 1 million bpd in additional production cuts gave oil prices some relief but forecasts such as the one Morgan Stanley just released won’t help as they all seem to agree that the market will remain oversupplied, discouraging a real price rally.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.