Morgan Stanley has lowered oil demand growth forecasts for this year on account of the slowdown resulting from the coronavirus outbreak which started in China and has since spread across the world. According to its recent estimates, oil demand growth for 2020 now stands at 500k bpd, lower than the previously forecast 800k bpd.

In addition, crude oil price forecasts have also been lowered, with US WTI price outlook lowered from $52.50 to $50 per barrel and UK Brent oil prices expected at $55 instead of $57.50 per barrel. Analysts widely expect OPEC and allies to announce supply cuts up to 1 million bpd after their meeting later this week, but the glut in oil markets could continue despite these curbs.

Since the beginning of this year, crude oil has lost around 30% of its value after China shut down factories and offices and imposed travel restrictions to contain the spread of the virus. However, just as Chinese companies started to resume operations, coronavirus infections grew across several countries internationally, increasing fears of further slowdown in the global economy.

Any economic slowdown drives reduced demand for oil, and with several countries worldwide imposing severe travel restrictions, the demand for oil has already started getting affected.