Organisation of the Petroleum Exporting Countries (OPEC), further slashed its 2020 oil demand forecast on Thursday, due to the Coronavirus outbreak, and agreed to new output cuts to offset the collapse in demand resulting from the epidemic.
Similarly, OPEC ministers agreed that oil production should be cut by 1.5 million barrels a day (mbpd) with members cutting 1.0mbpd and non-OPEC allies led by Russia cutting 0.5mbpd.
Brent Crude, similar to Nigeria’s sweet crude, dropped to $50.83 as at 6.00pm local time.
However, Russia has yet to make a decision, which could make things very interesting on Friday, when crunch talks with non-OPEC members kick-off.
Global oil demand growth in 2020 is now forecast to be just 480,000 b/d, down from 1.1mbd seen in December 2019, and half the growth level of OPEC’s most recent estimate.
The International Energy Agency (IEA) also cut its 2020 oil demand growth forecast by 365,000 b/d to 825,000 b/d, the lowest since 2011. It is scheduled to update its near-term oil demand forecasts next week.
OPEC earlier agreed to a plan to cut 1mbd of its own crude oil production and lobby Russia and nine other non-OPEC partners to slash 500,000 b/d of their output for a total reduction of 1.5mbd through the second quarter.
“The COVID-19 outbreak has had a major adverse impact on global economic and oil demand forecasts in 2020, particularly for the first and second quarters.
Moreover, the unprecedented situation, and the ever-shifting market dynamics, means risks are skewed to the downside,” OPEC said in a statement following the conclusion of its meeting in Vienna, Austrian capital.