OPEC has reduced its forecast for oil demand again this year due to the continued effects of the COVID-19 outbreak on the global economy. The group of oil-producing nations also cut its global consumption forecast for next year given the pandemic's likely lingering effects on growth.
OPEC's latest oil demand forecast anticipates that consumption will average 90.2 million barrels per day (BPD) in 2020. That's 400,000 BPD below its outlook from last month and a whopping 9.5 million BPD decline from 2019's average. Driving the downward revision is a weaker-than-expected recovery in India and other Asian countries because of the continued spread of COVID-19. Overall, OPEC sees consumption in that region coming in 500,000 BPD below its prior estimate, offset slightly by a 100,000 BPD improvement in developed nations.
The oil-producing group also warned that risks remain "elevated and skewed to the downside" for oil demand during the first half of 2021. As such, it also cut its outlook for next year by 400,000 BPD. That puts OPEC's expected average for consumption at 96.9 million BPD, which implies a 6.6% year-over-year increase from 2020's forecast level.
The U.S. Energy Information Administration (EIA) also recently issued a downward revision to its 2021 demand forecast for all liquid fuels due to lower expected consumption growth in China. The EIA cut its outlook by 500,000 BPD to 99.8 million BPD, which still implies a 6.5 million BPD increase over this year's average.
These downward revisions will likely keep the pressure on oil prices, which have tumbled more than 10% from their recent highs due to concerns that continued coronavirus case growth will weigh on demand.