The Federal Reserve of Dallas which has Permian basin in their economic region has been expecting the sector of oil and gas to cut their spending on capital by 10-15% in the year 2020.
Rob Kaplan who is the president of the district has said that this decline in the production growth of oil is going to have a major impact on the companies of energy services. A few of these companies have announced their restructurings as well as layoffs however he is expecting to witness a lot more of this as the year 2020 is going to be one where cost cutting and consolidation is going to happen
The oil production in United States has been estimated to grow by a level of 700,000 bpd form the fourth quarter of 2019 to the fourth quarter of 2020. The forecast is assuming a decline of the as much as 700,000 barrels per day in the non-OPEC production and a drop in the same level by OPEC too.
Kaplan has also cited the forecast of the IEA that the demand in the world is going to growth by 1 million bpd a day in the year 2020 to a level of 102.2 million bpd. He also pointed that the risks related to coronavirus are going to calm the demand down and present a risk which is more meaningful to the growth in demand since China has accounted for close to 14% of the consumption all over the world.
The IEA has forecast that the impact of virus may reduce the demand by close to 400,000 bpd in first quarter and this is going to be first decline which has taken place after the Great Recession.