On Tuesday, Morgan Stanley cut its forecast on oil demand growth for 2020 on the back of the outspread of coronavirus inside and outside China which could hurt oil demand.
The bank estimated China’s oil demand growth to be near zero this year, from the previous low estimation already of 350,000 bpd.
Demand from outside China is predicted to slow even more due to the virus. The global oil demand growth outlook was cut to 500,000 bpd from the previous forecast of an 800,000 bpd.
Morgan Stanley also revised down its predictions on oil prices. Brent was seen to be priced at USD55/barrel from USD57.5/barrel, while the US WTI estimates being cut from USD52.5 to USD50/barrel.
The bank expected that the Organization of the Petroleum Exporting Countries and its non-member allies (OPEC+) would announce a major cut of around 1 million bpd for this year’s first half and prolonged the existing quota until the end of 2020.
However, Morgan Stanley also saw that oil markets would still be moderately oversupplied this year, which drives Brent to remain in the USD50s.
