Although oil consumption growth continued in the fourth quarter of 2019, the International Energy Agency is again maintaining its global demand growth outlook for 2019 and the current year.
The agency, in its latest "Oil Market Report" released Jan. 16, is keeping its forecasts for global oil demand growth for 2019 and 2020 flat to its prior monthly report at 1 million barrels per day and 1.2 million bbl/d, respectively.
World oil demand increased by 955,000 bbl/d year over year to 101.1 million bbl/d in October 2019. For the 2019 fourth quarter, it is estimated to have grown by 1.9 million bbl/d year over year, with China's consumption increasing 800,000 bbl/d in November and India's by 500,000 bbl/d.
At the same time, global oil supply tumbled 780,000 bbl/d in December 2019 to 100.7 million bbl/d, down 1.3 million bbl/d on the year, as biofuels production declined seasonally and Saudi Arabia reduced output.
With non-OPEC oil supply growth accelerating from 2 million bbl/d in 2019 to 2.1 million bbl/d this year, the call on OPEC crude is forecast to fall from 29.44 million bbl/d in December 2019 to 28.5 million bbl/d during the 2020 first half, the IEA said.
OPEC+, a coalition of OPEC members and other major oil producers including Russia, decided Dec. 6, 2019, to add another 500,000 bbl/d to the 1.2 million bbl/d cut agreed to in December 2018 and extended in July 2019. The 1.7 million bbl/d cut was instituted Jan. 1 and will continue through March 31. OPEC+ members are expected to address a possible extension of the cuts when the group meets again March 5-6.
OPEC supply in December 2019 was 2.4 million bbl/d lower year on year, and the OPEC+ countries need to cut output by about 300,000 bbl/d in January to comply with their new agreement, the IEA said.
At the start of 2020, the oil market faced several challenges, including rising tensions in the Middle East, geopolitical turmoil, and a major change to its operating environment with the International Maritime Organization's new marine fuel regulations taking effect Jan. 1.