Oil demand is set to fall this quarter for the first time since the financial crisis in 2009 due to the coronavirus outbreak in China, the International Energy Agency (IEA) said Feb. 13.
"The consequences of Covid-19 for global oil demand will be significant," the Paris-based IEA said in a monthly report, using the new scientific name for the virus.
Demand in the first quarter of 2020 is expected to fall by 435,000 barrels per day (bbl/d) compared with a year earlier, it said, noted it would be "the first quarterly decrease in more than a decade."
"For 2020 as a whole, we have reduced our global growth forecast by 365,000 bbl/d to 825,000 bbl/d, the lowest since 2011," the IEA said, adding that it assumed economic activity from the second quarter would return progressively to normal.
In the second quarter, it said it expected oil demand to grow 1.2 million bbl/d before normalizing in the third quarter with growth of 1.5 million bbl/d on likely economic stimulus measures in China.
"China was responsible for around three-quarters of last year's global oil demand growth. Before the outbreak of Covid-19, it was expected to drive over a third of oil consumption growth in 2020, but now we think it will be less than a fifth," the IEA said.
It forecast a fall in demand for oil produced by OPEC while output growth by U.S. companies might not be impacted until later in the year.
OPEC output in January sank to its lowest level since the 2009 global recession, the IEA said, as a blockade reduced Libyan exports and the UAE reined in production.
"With Covid-19 potentially hitting demand hard in H1, producers are under pressure to make further cuts," it said.
OPEC, Russia and other producers, a group known as OPEC+, have agreed to cut output by 1.7 million bbl/d until the end of March to support the market.
OPEC+ is considering holding an extraordinary policy meeting to consider deeper cuts, sources said.
The IEA said Chinese refiners were set to slash runs by 1.1 million bbl/d in the first quarter, with throughput in 2020 contracting by 500,000 bbl/d year on year.
Global runs are set to expand by just 700,000 bbl/d in 2020, it said.
Occidental Petroleum said its fourth-quarter results would include charges and further cut its spending as the shale producer reduces costs following its purchase of rival Anadarko Petroleum.
Devon Energy had been actively shopping the Permian Basin assets, and others in the Rockies, the past several months.
Marathon Oil's quarterly results mirrored weaker earnings across the sector, as prices of global crude fell in the quarter on oversupply and demand concerns.