OPEC, Nigeria, COVID-19
OPEC

….As oil demand sets to drop by 20 m/bd in April

….Warns against severe economic recession

By Udeme Akpan

The Organisation of Petroleum Exporting Countries, OPEC, has put Nigeria’s oil production, excluding Condensate at 1.78 million barrels per day, m/bd, in March 2020.

According to data collated from official sources, this indicated an increase of 37,000 bpd when compared to 1.74 m/bd produced in February 2020.

In its April market report obtained by Vanguard, OPEC, which doubted the capacity of the global economy to take much oil at this time revised the 2020 global demand growth to 6.8 m/bd as the Coronavirus pandemic continues to hit the world.

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Demand

It stated: “For 2020, the world oil demand growth forecast is revised lower by 6.9 mb/d, to a historical drop of around 6.8 mb/d. The contraction in the 2Q of this year is expected to be around 12 mb/d, with April witnessing the worst contraction at about 20 mb/d.

“The impact of the COVID-19 outbreak in China in 1Q20, and its negative impact on transportation and industrial fuels in the country, has since spread globally and is now affecting oil demand growth in most other countries and regions, with an unprecedented impact on global oil demand, transportation fuels in particular.

“As a result, Organisation for Economic Co-operation and Development (OECD) oil demand is revised lower by 3.7 mb/d to decline by 4.0 mb/d, while non-OECD oil demand growth is adjusted lower by 3.2 mb/d to contract by 2.9 mb/d for the year.

Considering latest developments, and the large uncertainties going forward, downward risks remain significant, suggesting possibility of further adjustments, especially in the 2Q, should new data and further developments warrant revisions.”

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Supply

It stated: ”Non-OPEC oil supply growth in 2019 is revised down by 0.01 mb/d from the previous month’s assessment and is now estimated at 1.98 mb/d. For 2020, non-OPEC oil supply is forecast to decline by 1.50 mb/d, a downward revision of 3.26 mb/d from the previous projection.

“The impact of COVID-19, ensuing global economic recession and oil demand shock, will also lead to supply disruptions. Benchmark oil prices plunge prompted companies to respond by cutting capital expenditure to the lowest in 13 years.

“The 2020 oil supply growth forecast for the US was revised down by 1.05 mb/d to show a decline of 0.15 mb/d y-o-y. The supply growth for the 10 non-OPEC countries participating in the Declaration of Cooperation has also been adjusted lower.

“Oil supply in 2020 is now forecast to show growth only in Norway, Brazil, Guyana and Australia. OPEC NGLs production in 2019 is estimated to have grown by 0.04 mb/d to average 4.79 mb/d and for 2020 will grow by 0.04 mb/d to average 4.83 mb/d. In March, OPEC crude oil production increased by 821 tb/d m-o-m to average 28.61 mb/d, according to secondary sources.”

Recession

According to OPEC, “The world economy is forecast to face a severe recession in 2020, declining by 1.5 per cent, following global economic growth of 2.9 per cent in the previous year. Following tender signs of improvement at the beginning of the year, expectations for global economic growth were quickly burdened by the strong impact of the COVID-19 pandemic.

“Within the OECD, the US is forecast to contract by 4.1 per cent in 2020, following growth of 2.3 per cent in 2019. An even larger decline is expected in the Euro-zone, where economic activity is forecast to fall by 6.0 per cent in 2020, compared to growth of 1.2 per cent in 2019. Japan is forecast to contract by 3.9 per cent in 2020, comparing to growth of 0.7 per cent in 2019.

China’s 2020 GDP is forecast to grow by 1.5 percent, recovering from a sharp contraction in 1Q20 and following growth of 6.1 per cent in 2019. India is forecast to grow by only 2.0 per cent, a sharp slowdown from already weakening growth of 5.3 per cent in 2019.”

Vanguard

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