The International Energy Agency said Friday it now expects a decline in global oil demand, citing concerns for a potential economic downturn and the prolonged U.S.-China trade dispute.
The IEA projects demand growth to reach 1.1 million barrels per day for the rest of 2019 and 1.3 million barrels daily next year — a combined decline of 150,000 barrels per day.
Brent crude traded at $57.48 early Friday, up 0.2 percent. The U.S. benchmark, West Texas Intermediate, began at $52.64. Brent prices peaked this year in April ($74.57) and WTI topped out at $66.30. Both have shed more than 20 percent since then.
The Paris-based IEA said oil demand was “very sluggish” over the first half of the year.
Friday’s revision followed an overall economic downgrade last month by the International Monetary Fund, which expects the global economy to have grown 3.2 percent by year’s end, a decline of 0.3 percent from its initial forecast. Growth for 2020 was also revised down.
The IEA also said recent pledges by governments to secure vulnerable oil tankers in the Middle East provided some “reassurance.”
“Shipping operations are at normal levels, albeit with higher insurance costs,” it said in a statement.
OPEC production fell by 0.2 million barrels per day in July and by 0.1 million per day in the ten nations included in the OPEC+ agreement.
“In a clear sign of its determination to support market re-balancing, Saudi Arabia’s production was 0.7 million barrels per day lower than the level allowed by the output agreement,” the IEA said.
The IEA predicts the oil market will be well-supplied, based on projected demand in 2020.