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IEA predicts first quarterly drop in oil demand in more than 10 years

UNITED STATES (OBSERVATORY NEWS) — Oil demand will decline in the first quarter for the first time in more than 10 years due to the effects of an outbreak of coronavirus in China, the International Energy Agency (IEA) said.

In the first quarter of 2020, oil demand is expected to decline by 435 thousand barrels per day compared to the same period last year, the IEA’s monthly oil market report says.

In the second quarter, according to agency estimates, demand will increase by 1.2 million barrels per day. In the third quarter, demand growth is projected to accelerate to 1.5 million barrels per day due to likely economic stimulus measures in China.

The IEA has lowered its forecast for growth in demand for 2020 by 365 thousand barrels per day to 825 thousand barrels per day, which is the lowest since 2011. Lower than expected consumption in OECD countries reduced growth in 2019 to 885 thousand barrels per day, the report says.

OPEC production in January fell to a minimum since the global recession in 2009, as Libyan exports declined due to blockade of oil terminals, and the UAE reduced production, the IEA said.

“Since [coronavirus] Covid-19 could potentially hit demand in the first half, manufacturers are forced to make further cuts,” the report said.

Last week, the OPEC + Technical Committee recommended reducing production by another 600 thousand barrels per day in order to maintain oil demand amid the spread of Wuhan coronavirus.

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