The International Energy Agency lowered its global crude oil demand growth outlooks for 2019 and 2020 on weak demand from the U.S. and India against an increase in demand from China.
In its latest Oil Market Report released Aug. 9, the IEA lowered its 2019 forecast by 100,000 barrels per day to 1.1 million bbl/d and cut its 2020 demand growth forecast by 50,000 bbl/d to 1.3 million bbl/d.
The lower oil demand growth forecast correlates with concerns about continued worsening of the global economy, the IEA said in an article released the same day.
The U.S.-China trade dispute remains unresolved, and new tariffs are due to be imposed in September. As tensions escalate, volatility has increased in stock and commodity markets, the IEA said.
In less than one month, West Texas Intermediate crude oil futures crumbled from a peak of $60.43 per barrel on July 10 to an Aug. 7 settle at $51.09/bbl.
Global demand fell 160,000 bbl/d year over year in May, the second annual fall seen in 2019. In the period from January to May, global demand was up only 520,000 bbl/d, the lowest increase for the period since 2008.
The IEA said China was the sole source of significant demand growth in the first half. Of the 600,000 bbl/d estimate for crude oil demand growth in the first six months, China accounted for 500,000 bbl/d. India and the United States each saw demand rise by only 100,000 bbl/d, the IEA said.
For the OECD as a whole, demand has fallen for three successive quarters. Demand growth estimates for 2019 and 2020 have been revised down by 100,000 bbl/d to 1.1 million bbl/d and 1.3 million bbl/d, respectively, the IEA said.
The IEA said, "The outlook is fragile with a greater likelihood of a downward revision than an upward one."
While demand sinks, the IEA said global oil supply held steady in July above 100 million bbl/d but fell below year-earlier levels for the first time since November 2017.
The agency attributed the tighter supply to robust compliance with OPEC+ supply cuts and losses from Venezuela and Iran.
"The short term market balance has been tightened slightly by the reduction in supply from OPEC countries. Production fell in July by [200,000 bbl/d], and it was backed up by additional cuts of [100,000 bbl/d] by the 10 non-OPEC countries included in the OPEC+ agreement," the IEA said.
In July, OPEC and other allied major oil producers agreed to extend crude oil production cuts for nine months.
Saudi Arabia's production was 700,000 bbl/d lower than the level allowed by the output agreement. Non-OPEC supply was up 1.4 million bbl/d year over year in July. The IEA expects 1.9 million bbl/d non-OPEC supply growth in 2019 and 2.2 million bbl/d in 2020.
Tempering supply, after a year-on-year fall in the first half, global refining throughput is expected to pick up in the second half, increasing by 700,000 bbl/d.
"This follows the pattern of refined product demand growth, which was subdued in the [first half] but is forecast to rebound in the [second half]," the IEA said.
In 2019, China and the Middle East are alone in seeing growth in refining activity, the IEA said.