OPEC said it now expects world oil demand to grow by 6.6 million barrels a day to 96.9 million barrels a day in 2021, around 400,000 barrels a day below its previous forecast.
Oil demand is expected to decline by 9.5 million barrels per day, resulting in overall demand of 90.2m bpd this year.
Oil prices have collapsed as the coronavirus crisis has curtailed travel and economic activity.
But a second wave of COVID-19 cases and scattered lockdowns have once again darkened the prospects for demand, prompting the Organization of the Petroleum Exporting Countries to cut its expectations for global consumption and for demand for its own crude oil.
This was reported in the OPEC oil market report for September.
"Increased usage of teleworking and distance conferencing is estimated to limit transportation fuels from fully recovering to 2019 levels".
Demand from South Korea was also "better than expected" in the second quarter of the year, despite marginally easing, the report said. Prices have fallen by nearly 15% so far this month. Opec+, as the alliance is known, earlier cut 9.7m bpd from the markets between May and July to counter a record slump in demand and prices.
The report also says that Russian Federation in August improved the implementation of the agreement to cut oil production by OPEC + countries to 99% after July's 91%.
That amounted to 103% compliance with the pledges, according to a Reuters calculation - up from July's figure of 97%. Some delegates have voiced concern about the drop in prices this month although there are, as yet, no signs that the group is planning to tweak the supply pact.
What it means: Usually, crude oil prices surge higher when oil supplies are shut down, however, with the global exponential growth in COVID-19 caseloads, and oil demand falling momentarily, oil traders remain relatively cautious. That suggests the market will be in surplus should OPEC keep pumping at August's rate.
According to Reuters commodity and energy analyst John Kemp, funds sold the equivalent of a combined 171 million barrels in crude and refined products in the latest week, the fastest pace in over two years, with West Texas Intermediate down by 57 million barrels and USA gasoline down by 12 million barrels.