LONDON (Reuters) - OPEC slashed on Wednesday its forecast for global growth in oil demand this year due to the coronavirus outbreak and said more revisions might follow, underlining the deepening impact of the virus on the market days after a pact on output cuts collapsed.
The Organization of the Petroleum Exporting Countries expects global demand to rise by just 60,000 barrels per day (bpd) in 2020, a reduction of 920,000 bpd from its previous forecast, it said in a monthly report.
“Considering the latest developments, downward risks currently outweigh any positive indicators and suggest further likely downward revisions in oil demand growth should the current status persist,” OPEC said.
The report’s release follows the March 6 collapse of a pact on output cuts between OPEC and non-OPEC producers led by Russia. The prospect of burgeoning oversupply has sent oil LCOc1 down by 28% to $36 a barrel since March 5, losing OPEC members up to $500 million a day.
OPEC expects a greater impact on demand than the U.S. government’s Energy Information Administration, which on Wednesday cut its 2020 world oil demand growth forecast by 660,000 bpd to 370,000 bpd.
OPEC, Russia and other producers, a group known as OPEC+, had since Jan. 1 implemented a deal to cut output by 1.7 million bpd to support the market.
Three years of cooperation by OPEC+ producers ended in acrimony on Friday after Moscow refused to support deeper oil cuts to cope with the coronavirus outbreak. OPEC responded by removing all limits on its own production.
In February, OPEC over-delivered on its cuts, lowering supply by 546,000 bpd to 27.77 million bpd, according to secondary sources cited in the OPEC report, due to involuntary losses in Libya and deliberate extra cuts led by Saudi Arabia.
The report suggests there would be a 2020 supply deficit of if OPEC kept pumping at February’s rate and other factors remained unchanged, since OPEC estimated the demand for its crude this year at 28.18 million bpd.
But OPEC production is set to rise sharply following the collapse of the between OPEC, Russia and others, a group known as OPEC+. The United Arab Emirates followed Saudi Arabia on Wednesday by promising to hike oil output to a record high.
Editing by Jason Neely and Edmund Blair