Opec revised down its oil demand growth forecast for 2020 to 60,000 barrels per day, as it factored in the impact on economic growth from the continued spread of the coronavirus outbreak.
The group lowered its estimations for the year by 92,000 bpd, citing the spread of the epidemic beyond China, the biggest importer of oil. The report said further revisions could be expected for the remainder of the year, noting that downward risks outweighed any positive indicators.
"The impact of the Covid-19 outbreak in China and its adverse impacts on transportation and industrial fuels were the main causes of this downward revision," Opec said in its oil market outlook for March.
"In addition, the outbreak is also assumed to severely affect oil demand growth in various other countries and regions outside China, such as Japan, South Korea, Europe and the Middle East, which has led to a downward revision in those regions as well," the report added.
Opec until last week was in an alliance with non-member producers, led by Russia, to balance global inventories and work as counterweight to US shale. The alliance's pact to draw down 1.7 million bpd from the markets from the beginning of January until March fell through following disagreements on further deepening cuts by 1.5m bpd until the second quarter. Producers led by Saudi Arabia had been calling for increased cuts to offset the reduction in demand for crude as industrial activities in China and other countries slowed.
Opec in its latest monthly report estimates the total global oil demand for 2020 to average 99.73m bpd, with consumption expected to pick up in the second half.
The group joins the International Energy Agency in revising expectations for demand growth. The Paris-headquartered agency said earlier this week that global oil demand is set to contract in 2020 - the first full-year decline in more than a decade.
The agency expects a decline in oil demand of 90,000 bpd, largely due to the decline in consumption in the first half of the year.
The IEA cited the slowdown in China, where the government restricted the movement of its population to contain the virus, which originated in the Hubei province, as the main factor behind its outlook. China, the world's largest importer of oil, accounts for 80 per cent of global oil demand, according to the IEA.
Brent, the most widely-traded crude commodity settled at $35.79 per barrel, while West Texas Intermediate closed at $32.98 per barrel on Wednesday.