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Asia’s oil demand growth expected to moderate in 2020
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Bualuang oil field operated by Medco Energi Internasional in Thailand. (Handout/Medco Energi Internasional)
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eopolitical tensions, trade disputes, global macro-economic concerns, and production strategy of the Organization of Petroleum Exporting Countries Plus (OPEC+) were themes that dominated oil market sentiment in 2019.
As we enter 2020, the global economy is seen stabilizing. China — a key driver of commodities demand — has announced decisive measures to ensure a strong start to the economy; and the United States and China look closer to a trade deal than ever before, though it would be naïve to assume that the road ahead will be smooth.
These, coupled with strong demand related to International Maritime Organization’s (IMO) lower marine fuel sulfur specification that takes effect on January 1 should keep oil demand growth in slightly positive territory next year.
But supply will outpace demand despite OPEC’s production cuts as non-OPEC supply grows — a factor that should keep a lid on prices in 2020.
Standard and Poors Global Platts Analytics expects global oil demand growth of 1.2 million to 1.3 million barrels per day (bpd) in 2020, up from just under 1 million bpd in 2019. Excluding the IMO effect, demand growth is expected to be steady at 1 million bpd.
Asia-Pacific’s petroleum demand growth is, however, expected to moderate from around 680,000 bpd in 2019 and will be well below the 900,000 bpd seen in 2018, according to Platts Analytics.
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