The Organization of the Petroleum Exporting Countries (OPEC) on Wednesday slashed its 2020 global demand forecast further and expected the steepest demand fall to take place in the second quarter although some countries began to relax lockdown measures aimed to contain the coronavirus pandemic.
In its latest monthly report, OPEC now forecasts global oil demand to shrink by 9.07 million bpd, or 9.1%, this year. In the previous report, OPEC estimated a demand decline of 6.85 million bpd. For this quarter, OPEC lowered its demand forecast by 5.4 million bpd, based on demand weakness in the US, Europe, and South Korea.
OPEC and its allies agreed last month to cut supply by 9.7 million bpd in May and June to tackle the falling prices. OPEC reported a surge in its April output as some members, such as Saudi Arabia, the UAE, and Kuwait pumped more oil following the collapse of its previous agreement. Secondary data showed OPEC production rose by 1.8 million bpd to 30.41 million bpd in April.
Production by non-OPEC producers is expected to decline by 3.5 million bpd this year, compared to the cartel’s previous estimates of 1.5 million bpd. OPEC projected the demand for its crude to fall to 24.26 million bpd in 2020, cut by an additional 240,000 bpd from its last month estimates. This suggests that to prevent a surplus, OPEC producers need to reduce production by 6 million bpd from April’s levels.
