The oil market is going from gloomy to gloomier, according to Rystad Energy.

The oil market is going from “gloomy” to “gloomier”, according to Rystad Energy.

In a statement sent to Rigzone on Friday, the energy research company said recent developments in the sector had sent “cold shivers” through its oil market team and called into question the organization’s temporary bullish view for the first part of 2020.

“Economic recession risk and further escalation of the U.S.-China trade war are key concerns in the near term. How long OPEC+ is willing to continue to manage production adds uncertainty,” Bjornar Tonhaugen, head of oil market analysis at Rystad Energy, said in the statement.

“Continued worsening of U.S.-China trade relations could lower demand growth by 200,000 barrels per day (bpd) to 1 million bpd in 2020,” he added.

In the statement, Tonhaugen said the company sees a clear downside risk to 2020 prices due to excessive supply growth.

“We still believe the market does not recognize the positive effect on crude demand that IMO 2020 will bring. However, if the IMO effect on crude demand is less than expected, OPEC intervention may be needed as early as the first quarter of 2020 to avoid imbalances in the oil market,” he added.

Last week, the International Energy Agency (IEA) lowered its oil demand growth estimates to 1.1 million barrels per day (MMbpd) in 2019 and 1.3MMbpd in 2020.

“The outlook is fragile with a greater likelihood of a downward revision than an upward one,” the IEA said in an organization statement on Friday.

In June, the IEA cut its 2019 oil demand growth forecast from 1.3MMbpd to 1.2MMbpd. That was the IEA’s second consecutive oil demand growth forecast cut, following a decrease from 1.4MMbpd to 1.3MMbpd in May.

The U.S. Energy Information Administration (EIA) cut its Brent spot price forecast to $64 per barrel in the second half of 2019 and $65 per barrel in 2020 in its latest short-term energy outlook (STEO). In its previous STEO, released in July, the EIA’s Brent spot price forecast for the second half of the year and 2020 was $67 per barrel.

A report sent to Rigzone last week revealed that Fitch Solutions Macro Research (FSMR) analysts had made a “major downward revision” to their Brent oil price forecasts. The analysts now expect prices to average $67 per barrel this year and $65 per barrel in 2020. This compares to FSMR’s previous forecasts of $70 per barrel in 2019 and $76 per barrel next year.