Oil consumers see relief as the global oil market has become volatile again mainly due to a weak economic outlook that is partly dampened by the United States’ trade wars.
In its latest monthly oil market report, the International Energy Agency noted that world trade growth had fallen back to its slowest pace since the financial crisis 10 years ago.
Last month, prices of the global benchmark Brent crude oil fell to $60 a barrel from $70 a barrel.
In the Philippines, oil firms cut prices over the past three consecutive weeks by a total of P4.20 a liter of diesel and P4.50 a liter of gasoline.
In Metro Manila, diesel prices now range from P37.35 to P42.69 a liter. For gasoline, prices are P44-P55.45 a liter.
“The consequences for (global) oil demand are becoming apparent,” the IEA said. “In the first quarter of 2019, growth was only 0.3 million barrels per day (mbpd) versus a very strong first quarter of 2018 (which was a seven-year low).”
The Paris-based agency said meeting the expected demand growth was “unlikely to be a problem” considering that plentiful supply would be available from non-Opec (Organization of Petroleum Exporting Countries) nations, which account for two-thirds of global supply.
For full-year 2019, IEA cut for the second month in a row its estimate for global oil demand growth, which was now projected at 1.2 mbpd.
“A clear message from our first look at 2020 is that there is plenty of non-Opec supply growth available to meet any likely level of demand, assuming no major geopolitical shock, and the Opec countries are sitting on 3.2 mbpd of spare capacity,” the IEA said.
“This is welcome news for consumers and the wider health of the currently vulnerable global economy, as it will limit significant upward pressure on oil prices,” it added. “However, this must be viewed against the needs of producers particularly with regard to investment in the new capacity that will be needed in the medium term.”