NEW YORK (Reuters) - U.S. crude production is expected to slump by 470,000 barrels per day (bpd) and demand is set to plunge by about 1.3 million bpd in 2020, the U.S. Energy Information Administration (EIA) said on Tuesday, as the coronavirus pandemic slams global markets.
The EIA also cut its 2020 world oil demand growth forecast by 5.6 million bpd to 5.23 million bpd but forecast a rebound for both U.S. and global demand in 2021.
The threat of a major recession hangs over the market after the hit to economic activity as a result of the coronavirus pandemic, with about half the global population under some form of lockdown or social distancing measures.
“We expect the biggest effect of COVID-19-related restrictions on U.S. liquid fuels demand will occur in the second quarter of 2020 before gradually dissipating over the next year and a half as normal travel and business activity slowly recover,” EIA Administrator Dr. Linda Capuano said.
“U.S. motor gasoline consumption will reach some of the lowest levels in 20 years in the second quarter of 2020.”
Major oil producers with operations around the world have cut their 2020 capital spending by about 25%, or nearly $55 billion, data compiled by Reuters showed, as oil prices plunged by the most on record in the first quarter.
The world’s main oil producers, including Saudi Arabia and Russia, are expected to agree to cut output at a meeting on Thursday in an effort to prop up prices, though that would depend on the United States joining in, sources told Reuters.
U.S. crude output is expected to drop to 11.76 million bpd this year, reversing its previous forecast for a rise in output.
The agency said it now expects U.S. petroleum and other liquids consumption to plunge 1.33 million bpd to 19.13 million bpd in 2020 compared with its previous forecast for a rise of 60,000 bpd.
In its monthly forecast, the agency raised its global oil demand growth estimate for 2021 by 4,7 million bpd to 6.41 million bpd. U.S. oil demand in 2021 is expected to rise 1.26 million bpd to 20.39 million bpd in 2021 compared with its previous forecast for a rise of 200,000 bpd last month.
U.S. crude output in 2021 is forecast to drop by 730,000 bpd to 11.03 million bpd, compared to its previous forecast for a decline of 330,000 bpd, according to the EIA.
Reporting by Devika Krishna Kumar in New York; Editing by Marguerita Choy and Paul Simao
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