Oil demand is expected to be lower than the estimated million barrels per day this year and 900,000 bpd in 2020, according to the Institute of International Finance.
The forecast by the Washington association is lower than estimates by the International Energy Agency and Opec.
The IIF, which expects Brent oil prices to average $65 per barrel in 2019 and $62 in 2020, forecasts lower demand growth due to slowing economic activity in big demand drivers of China and India.
"Growth in global demand for oil continues to be dominated by emerging and developing economies, with China accounting for half of the incremental increase and India one-fourth,” the IIF said in a recent report.
However, the big outlier for the industry in 2018 was the US, the world’s largest producer of oil, IIF said. Oil demand in the US grew by 500,000 bpd, the largest increase since 2004.
Agencies such as the IEA have said global demand growth would be slower than expected for the second half of the year, because of mounting concerns over trade tensions between the US and China, the world's biggest buyer of oil.
The IEA expects demand growth for crude to reach 1.1 million bpd in 2019 and 1.3 million bpd in 2020, a reduction of 100,000 bpd for this year and 50,000 bpd for the next.
The agency said the situation had become “even more uncertain” with growth in the first half being “very sluggish”.
The IEA said more corrections could be seen for the remainder of the year.
Slowing economic growth in China, would also exert considerable pressure on demand, according to the IIF, which estimates for one percentage point of lower Chinese growth, demand for oil by China weakens by 300,000 bpd.
Chinese economic growth has slumped to its lowest in 27 years, as Beijing feels the pinch of various taxes on its exports by Washington. The country’s gross domestic product grew at 6.2 per cent in the second quarter, the slowest since 1992.
Despite slowing demand, the IIF expects supply growth to accelerate, particularly from non-Opec producers such as Brazil, Norway and Canada, as a result of new projects coming on-stream. Output, including that from the US, is likely to increase 1.6 million bpd this year and 1.8 million bpd 2020.
The IIF cautioned markets against overestimating US shale supply as pipeline bottlenecks are expected to squeeze output to 1.3 million bpd from 1.6 million bpd seen in 2018. Production next year is expected to grow at a contained 900,000 bpd.
Growth from Opec producers, meanwhile, is expected to decline by 2.1 million bpd this year, due to the strong compliance to production curbs the group has undertaken, including commitments from non-Opec producers led by Russia. Growth will also be offset by declines from Venezuela and Iran, whose supplies have squeezed because of US sanctions.
Opec+, as the alliance of producers undertaking market corrections is known, have pledged to cut 1.2 million bpd of output until March 2020.
