NEW YORK (Reuters) - The U.S. Energy Information Administration on Tuesday cut its global oil demand growth forecast for this year by 310,000 barrels per day (bpd) as the coronavirus outbreak dents oil consumption in China, the world’s No. 2 economy.
The government agency reduced its estimate for global demand in 2020 to an increase of 1.03 million bpd to 101.74 million bpd.
After more than 1,000 deaths and weeks of uncertainty that has roiled global financial markets and stoked fears of a slowdown in economic growth, China’s foremost medical adviser on the epidemic said infections may be over by April.
“EIA expects that travel restrictions in response to the coronavirus, along with the related economic slowdown in China, will reduce petroleum demand and keep crude oil prices below $60 per barrel through the first half of this year despite current disruptions to crude oil supply,” EIA Administrator Linda Capuano said.
Oil prices this week hit a 13-month low, with global benchmark Brent crude LCOc1 falling to about $53 a barrel, due to concern over the potential for lengthy oil demand destruction. [O/R]
The cut in global demand growth also reflects warmer-than-normal January temperatures across much of the northern hemisphere, the EIA said.
The EIA also cut its growth forecast for surging U.S. crude output, which has helped make the United States the world’s biggest oil producer, overtaking Saudi Arabia and Russia.
U.S. crude production is expected to rise by 960,000 bpd in 2020 to a record of 13.2 million bpd, below EIA’s previous forecast for a rise of 1.06 million bpd.
Output in 2021 is forecast to rise by 360,000 bpd to 13.56 million bpd.
The rate of growth is expected to slow into next year as U.S. oil producers follow through on plans to slash spending on new drilling for a second year in a row in 2020.
The agency expects U.S. petroleum demand to climb 90,000 bpd to 20.53 million bpd in 2020, below its previous forecast for a rise of 160,000 bpd to 20.64 million bpd.
U.S. demand is expected to rise 180,000 bpd to 20.71 million bpd in 2021, the EIA said, compared with its previous forecast for a rise of 70,000 bpd.
EIA’s global petroleum supply forecast assumes that the Organization of the Petroleum Exporting Countries (OPEC) will reduce crude production by 500,000 bpd from March through May because of lower expected global oil demand in early 2020, the agency said.
OPEC production is expected to average 28.9 million bpd in 2020, 300,000 bpd less than the forecast a month earlier.
A technical panel that advises OPEC and its allies, led by Russia, have proposed an additional output cut of 600,000 bpd, sources told Reuters last week.
Reporting by Devika Krishna Kumar in New York; Editing by Chizu Nomiyama and Marguerita Choy