OPEC cuts oil demand outlook for the year, citing the coronavirus outbreak in China as a 'major factor'

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  • The Organization of the Petroleum Exporting Countries on Wednesday slashed its forecast for oil demand growth in 2020, citing the coronavirus outbreak in China as a reason.
  • Global oil demand growth in 2020 is expected to be 0.99 million barrels per day, down by 230,000 bpd from the previous month's estimate, according to a monthly report from the group.
  • West Texas Intermediate crude rose 2.24% to $51.06 per barrel while Brent crude rose nearly 3% to $55.48 per barrel as of 9 a.m. in New York.
  • Watch oil trade live on Markets Insider.
  • Read more on Business Insider.

The Organization of the Petroleum Exporting Countries on Wednesday lowered its forecast for oil demand growth in 2020, saying that the coronavirus outbreak in China is a "major factor" in the downward revision.

Global oil demand growth in 2020 is expected to be 0.99 million barrels per day, down by 230,000 bpd from the previous month's estimate, according to a monthly report from the group. Advertisement

"The impact of the coronavirus outbreak on China's economy has added to the uncertainties surrounding global economic growth in 2020, and by extension global oil demand growth in 2020," OPEC said in the report. The coronavirus outbreak has killed 1,100 people and infected more than 45,000.

"Clearly, the ongoing developments in China require continuous monitoring and assessment to gauge the implications on the oil market in 2020," the report said. OPEC also lowered Chinese oil demand estimates for the first half of the year down 200,000 bpd from the previous month.

West Texas Intermediate crude rose 2.24% to $51.06 per barrel while Brent crude, the international benchmark, rose nearly 3% to $55.48 per barrel as of 9 a.m. in New York. Both have posted five straight weeks of losses since the coronavirus hit and curbed demand in China, which at least one analyst called the "first black swan of the decade" for the oil market.
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The report could support further output cuts from OPEC and its partners to calm the market that's been roiled by the coronavirus outbreak.

Saudi Arabia, the largest exporter in OPEC, pressed the group and its allies to hold an emergency meeting in early February to consider further cuts. Russia, the group's most important ally, is still considering signing on to the additional cuts, CNBC reported. Get the latest Oil WTI price here.Advertisement

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