Global oil demand in 2020 may show the largest drop in history against the background of unprecedented measures that are being taken in many countries to combat the spread of the coronavirus, Interfax writes with reference to Bloomberg.
"Travel bans, work from home, cancelled holidays and disrupted supply chains all invariably lead to lower fuel demand. As society continues to respond to the virus, demand for oil, which has already suffered as a result of China's decision to stop entire sectors of the economy, continues to fall," the Agency notes.
Oil traders, CEOs, hedge Fund managers, and consultants are revising their forecasts downward. Many fear that oil demand in 2019, on average amounting to 100 million barrels per day (b/d), show the maximum fall this year, which in its scale will surpass the decline in demand of 1 million b/d during the recession in 2009 and even a drop of 2.65 million barrels per day, recorded in 1980, when the world economy collapsed after the second oil crisis.
Since the beginning of the year, oil has fallen by more than 50%. Saudi Arabia, having failed to secure Russia's agreement on March 6 to further reduce oil production in response to a sharp decline in demand due to the coronavirus, decided to increase production and lower prices for buyers. This brought down the already falling oil prices - Brent fell in price on March 9 by 24%, WTI-by 25%. Later, the quotes recovered slightly, but continued to decline on Monday.
"We have never seen such a situation with demand in history," the Agency quotes Saad Rahim, chief economist at Trafigura Group, a trading company. "Demand will continue to worsen every day for some time to come."
Goldman Sachs, one of the largest commodity traders on wall street, forecasts that from February to April, oil demand will decline by more than 4 million b/d monthly. Other investors expect an even deeper fall in the short term.
"We will see a sharp reduction in demand for oil," says Giovanni Serio, chief economist at Vitol Group, a trading company, who is also quoted by Bloomberg.
Trafigura, one of the three largest independent oil traders in the world, believes that the decline in oil demand will soon reach 10 million b/d, or 10% of total global consumption. This forecast, as the Agency notes, is only for the short-term period, and not quarterly or annual. However, it implies a very sharp drop in consumption.
Consulting company IHS Markit expects consumption to fall by 1.42 million b/d on average this year, and in the worst case scenario, the drop will be 2.8 million b/d.Another consulting company, FGE, forecasts a decline of 1.3 million b / d on average for the year.
According to the forecast of the International energy Agency (IEA), published on March 9, global demand for oil in 2020 will decrease by about 90 thousand b/s.