IEA Cuts Oil Demand Growth Forecast for Second Quarter

The International Energy Agency lowered its forecast for global oil demand growth in the second quarter of the year on Friday, citing a warm winter in Japan, a slowdown in the petrochemicals industry in Europe and a worsening trade outlook across all regions as contributing factors.

The Paris-based agency currently sees global demand growth lower by 0.1 million barrels per day in the second quarter compared with its forecast a month ago. It said, however, that there is optimism the latter part of the year and 2020 will see an “improved economic picture. ”

It said that the Organization of Economic Cooperation and Development sees global economic growth rebounding to 3.4% in 2020, assuming that trade disputes are resolved and confidence rebuilds. According to the IEA, that suggests global oil demand growth will have scope to recover from 1.2 million barrels per day in 2019 to 1.4 million barrels per day in 2020.

“World trade growth has fallen back to its slowest pace since the financial crisis ten years ago, according to data from the Netherlands Bureau of Economic Policy Analysis and various purchasing managers’ indices,” the report stated.

“The consequences for oil demand are becoming apparent. In 1Q19, growth was only 0.3 million barrels per day versus a very strong 1Q18, the lowest for any quarter since 4Q11,” the IEA said.

The agency said the main weakness was in OECD countries where demand fell by a “significant” 0.6 million barrels a day, with the decline spread across all regions.

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