The Organization of the Petroleum Exporting Countries said Monday that it was cutting back slightly its forecast for demand for crude for 2020 and 2021, another sign of new pessimism in the oil markets.
The trim amounts to around a half-percent of global demand, or 400,000 barrels a day. In its Monthly Oil Report, OPEC pointed to weak consumption of transportation fuels like gasoline and jet fuel, and disappointing demand in India as reasons for the revision. Oil prices, which collapsed in April but regained strength through the summer, slipped downward last week on word that oil production has begun to exceed demand.
In further bad news for OPEC, the energy giant BP issued a report that supported the idea that demand for fossil fuels has reached its limit. The central scenario of BP’s annual Energy Outlook, which was led by the company’s chief economist, Spencer Dale, found that demand for oil had likely already peaked, would “not fully recover from the sharp drop” caused by the coronavirus pandemic, and would fall by about 50 percent by 2050.
That view bolsters the rationale for the recent decision of BP’s chief executive, Bernard Looney, to throttle back oil and gas production and investment in favor of cleaner energy, chiefly electricity.
Renewable energy like wind and solar would gain at the expense of fossil fuels, increasing by more than tenfold, according to the scenario. At the same time, the share of electricity used in activities like driving and heating and lighting buildings would more than double, to about 45 percent by 2050.