• Covid-19 (coronavirus) has spread beyond China and our 2020 base case global oil demand forecast is cut by 1.1 mb/d. For the first time since 2009, demand is expected to fall year-on-year, by 90 kb/d. In 1Q20, China’s demand falls by 1.8 mb/d y-o-y with global demand down 2.5 mb/d. We assume that oil demand returns to close to normal in 2H20. In this Report we provide a Low Case and a High Case detailing weaker and stronger outlooks, respectively.
  • Global oil supply fell by 580 kb/d in February as production from Libya slowed to a trickle. At 100 mb/d, output was virtually flat on a year ago, with non-OPEC gains of 2.4 mb/d offsetting declines from OPEC. Robust non-OPEC supply gains of 2.1 mb/d in 2020 and a contraction in demand cut the call on OPEC crude to 27.3 mb/d. In 1Q20, the call is 25 mb/d, 3.5 mb/d below the group’s assumed output for the period.
  • Global refining throughput in 2020 is expected to decline for the second consecutive year, falling below 2017 levels as demand for transport fuels plunges in the wake of the coronavirus. In 1Q20, refining intake has been revised down by 1.2 mb/d, primarily due to China, where February runs are estimated at 10.1 mb/d, down 2.7 mb/d y-o-y. February margins saw short-lived support from falling crude oil prices.
  • OECD industry stocks rose by 27.8 mb to 2 930 mb in January as a build in product inventories more than offset counter-seasonal draws in crude stocks. Total oil stocks stood 2.9 mb above the five-year average and covered 63 days of forward demand. Short-term floating storage of crude oil built 1.9 mb in February to 80.2 mb, most of which is owned by Iran. Satellite data show a near 1 mb/d increase in Chinese stocks, reflecting slowing demand.
  • ICE Brent fell below $46/bbl during 6 March, the lowest level since June 2017. As well as the negative impact on demand of the coronavirus, the outcome of the OPEC+ meeting was seen by traders as a bearish signal. In February and into March, Chinese run cuts pressured the price of crude from the Middle East and West Africa in particular. Travel restrictions and lower industrial activity due to the virus weighed on cracks for jet fuel, diesel and gasoil.
Posted in: IEA