Analysts say the concerns of slowing consumption as a fear of a global recession that global oil markets have undergone a turnaround, shifting from supply risks such as OPEC production cuts or US sanctions against Iran and Venezuela producers.
As a result, crude oil prices have turned a 45% price hike in the first four months of the year to a fall of more than 15% since late April.
And with the pale appearance of trade disputes, especially those that have led to an increasing exchange rate hike between China and the United States, analysts have revised the forecasts for rising oil demand.
Fereidun Fesharaki, chairman of the FGE energy consultancy, said the slowdown in demand came amid a “general fear of an economic downturn” and warned that if the US trade dispute continues, “real signs of economic recession will be seen.”
Due to economic worries, the FGE this week revised its global oil demand forecast to 1 million barrels a day (bpd) by 1.3 million bpd, in line with recent decreasing recent corrections.
Barclays said this week that it had revised its economic growth forecasts for the United States, China, India and Brazil, the countries that account for more than three-quarters of the rise in global oil demand.
The British bank also reduces the forecast of rising demand for oil by 300,000 bpd to 1 million bpd.
He said, “There is potential for further reduction in demand, which means that this is likely to be the worst year for rising demand for oil since 2011.”
Bank of America Merrill Lynch said that “the global oil demand growth is moving to the worst rate since 2012,” although it still estimates an increase of about 1.2 million bpd in 2019.
Analysts participating in a Reuters oil study may have the best growth forecasts at around 1.4 million bpd, compared to 1.7 million bpd in a January poll.
World Oil Demand for Supply –
The heart of the stuttering demand is an economic slowdown.
This week, TS Lombard research firm said that “Asia-dependent export economies in the Pacific and Europe have been severely hit and close to recession,” while the United States is “moving towards slower growth”.
TS Lombard warned that an unresolved Sino-American trade war “has the potential to trigger a recession in 2020, if not before.”
The trade war between the United States and China, the two largest economies in the world, has already hit global trade volumes and is beginning to show a slowdown in fuel consumption.
China’s crude oil imports fell from 8 percent from April to 40.23 million tons (9.47 million bpd), a slump affected by economic slowdown and US sanctions against Iran, one of China’s leading oil suppliers.
China’s car sales fell in May to 1.91 million, down 16.4% from the previous year, China’s Automobile Manufacturers Association said on Wednesday, marking a 11th consecutive month of decline in the largest car market in the world.
New car sales in China
Slow demand growth is colliding with rising US production, which the US Energy Information Administration expects to learn 13.5 million bpd by the end of next year.
The United States is now the largest oil producer in the world with 12.4 million bpd, ahead of Russia and Saudi Arabia.
DO NOT ALL DOOM & GLOOM
Not all analysts register in a late scenario.
Phil Flynn, an analyst at Price Futures Group in Chicago, said the “Growth Demand” is too exaggerated, despite the challenges in the global economy.
He said that “central bank measures to boost growth, coupled with the recent slippage in oil prices, may all cause a return on demand.”
While Goldman Sachs said, “Economic activity has recently come under the expectations of our economists, it remains flexible and they (economists) do not expect to have a further sharp slowdown.”/Investing.com