COVID-19 demand update: Oil seen down 9.4 per cent

moritz kindler c6zi9au0KOc unsplashRystad Energy’s newest forecast for oil demand now projects a decrease of 9.4 per cent for 2020, or 9.4 million barrels per day (bpd) y-o-y

Rystad estimates show that total oil demand in 2019 was approximately 99.9 million bpd, which is now projected to decline to 90.5 million bpd in 2020. To put the number into context, last week the firm projected a decrease of 6.4 million bpd.

At the moment the firm expect the month of April to take the biggest hit, with demand for oil estimated at 72.6 million bpd, falling by 27.5 million bpd y-o-y, a 27.5 per cent drop. Similarly, May’s demand is expected to fall by 19 per cent, or 19.1 million bpd to 79.9 million bpd.

This downgrade takes into account developments that have occurred up to and including Tuesday, 7 April.

Road fuel demand:

Rystad believes that global total demand for road fuels will fall by 9.4 per cent, or by 4.5 million bpd y-o-y, a downgrade from last week’s report, where road fuels were expected to decline by just 5.6 per cent.

Road fuel demand in 2019 is estimated to have reached 47.7 million bpd. The firm now see it reaching only about 43.2 million bpd in 2020.

Most of this reduction will also take effect in April, which will see its road fuel demand limited to just 32 million bpd globally, down from 47.7 million bpd a year ago, a 33 per cent drop. May’s road fuel demand is now estimated at 38.2 million bpd from 47.6 million bpd last year, down by almost 20 per cent.

Jet fuel demand:

Among the various fuel sectors, Rystad expects jet fuel to be hit the hardest. The global commercial air traffic will fall by at least 23 per cent this year versus the levels seen in 2019, which Rystad estimates stood at around 99,700 flights per day. This number will be revised as operators continue to cut routes.

Many distressed airlines are now facing heavy cost cuts, laying off unprecedented numbers of employees as many non-essential routes are closed.

As a base case the firm now assume that the common summer air travel peak will not occur at all this year. Rystad now see global jet fuel demand falling by almost 31 per cent y-o-y, or by at least 2.2 million bpd. Last year’s demand for jet fuel was seen at about 7.2 million bpd.

Jet fuel demand in April will be as low as 2.6 million bpd and in May 2.4 million bpd.

Alain Charles Publishing, University House, 11-13 Lower Grosvenor Place, London, SW1W 0EX, UK
T: +44 20 7834 7676, F: +44 20 7973 0076, W: www.alaincharles.com

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