OPEC on Wednesday cut its forecast for global growth in oil demand this year due to the coronavirus outbreak and said its output fell sharply in January as producers implemented a new supply-limiting pact.
In a report, OPEC said 2020 demand for its crude will average 29.30 million barrels per day (bpd), 200,000 bpd less than previously thought. OPEC pumped below that rate in January, suggesting a 2020 supply deficit.
The report could bolster the case for even more supply curbs by the Organization of the Petroleum Exporting Countries, which is considering whether to curb output further to offset slower demand. Oil has fallen 15 percent this year to $55 a barrel, alarming producers.
“The impact of the coronavirus outbreak on China’s economy has added to the uncertainties surrounding global economic growth in 2020, and by extension global oil demand growth,” OPEC said in the report.
“Clearly, the ongoing developments in China require continuous monitoring and assessment.”
In the report, OPEC said world oil demand will rise by990,000 bpd this year, down 230,000 bpd from the previous forecast. That is less than the reduction made by the US government’s Energy Information Administration in its report on Tuesday.
Oil rose after the report’s release, trading near $56 a barrel. Some analysts are beginning to say the market may have bottomed out on hopes the virus impact will peak this month.
OPEC, Russia and other producers, a group known as OPEC+, have since January 1 implemented a deal to cut output by 1.7 million bpd to support the market.
A technical panel that advises OPEC+ proposed last week a new cut of around 600,000 bpd. The producers are also considering bringing forward their next policy meeting to February from March 5-6.
OPEC has yet to make any announcement on an early meeting and Iran’s oil minister said on Saturday the pressure to reschedule the gathering had eased.