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IEA trims 2020 global oil demand growth forecast

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IEA trims 2020 global oil demand growth forecast

The International Energy Agency revised lower its global oil demand growth outlook for 2019 and 2020 due to slight changes in 2018 consumption data and the potential for the world economy to grow more slowly in 2020.

In its latest Oil Market Report released Oct. 11, the Paris-based agency said oil demand growth should rise by 1.0 million barrels per day this year and by 1.2 million bbl/d in 2020. Both outlooks are down by 100,000 bbl/d.

The IEA said the reduction for 2019 is due mainly to a technical adjustment that indicates higher U.S. demand in 2018, which has depressed this year's growth figure.

Global oil supply fell by 1.5 million bbl/d in September to 99.3 million bbl/d due to attacks on Saudi Arabian oil facilities that briefly shut in more than half the country's production and led global oil prices to spike. Even though Saudi output has been restored, crude oil stock draws are likely in the fourth quarter, the IEA said.

OECD industry stocks increased by 20.8 million bbl in August and stood 43.1 million bbl above the five-year average, according to the report. Preliminary data for September showed stocks falling in all three OECD regions and by 21.7 million bbl overall.

"A different picture emerges for 2020, when non-OPEC supply growth, led by the U.S., Brazil, and Norway, accelerates from 1.8 [million bbl/d] to 2.2 million bbl/d, reducing the call on OPEC to 29 million bbl/d," the agency said.

Amid weak global crude oil prices, OPEC agreed July 1 to keep throttling back output by extending its 1.2 million bbl/d production cut agreement through the first quarter of 2020. In December 2018, OPEC members and other major oil producers including Russia agreed to the oil output cut, with members trimming their output by 800,000 bbl/d and non-OPEC members reducing production by 400,000 bbl/d.

During the third quarter, global refining throughput fell by 500,000 bbl/d from the same period a year earlier, prompting the IEA to cut its annual growth forecast to just 150,000 bbl/d, the lowest level in 10 years. Following a counter-seasonal draw in the third quarter, throughput is set to return to year-over-year growth in the fourth quarter and should rise by 1.2 million bbl/d in 2020.