US Energy Secretary Dan Brouillette told Reuters the coronavirus epidemic in China has had a marginal impact on energy markets and is unlikely to dramatically affect oil prices even if Chinese demand falls by 500,000 barrels per day.
In its monthly report on the world's oil market, Opec said it now expects growth in global oil demand of 0.99 million barrels per day (mbd) this year, down from the 1.22 mbd forecast last month. "The crisis is ongoing and at this stage it is hard to be precise about the impact".
The IEA chopped its forecast for China's GDP growth in the first quarter of this year by 1.5 percentage points to 4.5 percent. The effects will be more significant than those of the 2003 SARS epidemic because of China's increased importance and integration within the world economy.
With it estimating that China's global air travel having fallen by 70 percent and domestic travel by half in the early part of the crisis, the IEA expects double digit drops in jet fuel demand in the country.
"Evidently, the timing of the outbreak exacerbated the impact on transportation fuel demand in China, as it coincided with the Chinese Lunar New Year holidays, as millions of Chinese return home to celebrate with family members and friends, or travel overseas", OPEC said.
Oil refiner China National Chemical Corp said on Thursday that it would close a 100,000 bpd plant and cut processing at two others amid falling fuel demands.
On Wednesday, OPEC cut its forecast for oil demand growth this year, saying the coronavirus outbreak was the primary reason. Its oil demand has nearly doubled since 2003 and represented more than three-quarters of global oil demand growth previous year. While production is expected to average at 28.9 million barrels a day in 2020, which is 0.3 million less than expected in January.
Wednesday's report comes after OPEC members and their allies, including Russian Federation, last week were unable to reach an agreement to deepen production cuts.