Oil demand for the rest this year may continue to fall by as much as 3.7 million barrels per day (Mb/d), Outlook released by global research body, Rystad Energy, backed the projections with the second wave of Coronavirus pandemic, saying the development would stall demand.
Like Rystad Energy, the Organization of the Petroleum Exporting Countries (OPEC), had earlier in the month, revised world oil demand in 2020 to an estimated drop of 8.9Mb/d (bpd), adjusting it up by 0.1Mb/d against last month’s projection.
This comes as OPEC+ agreed to ease output cuts. The cartel had agreed on a 9.7Mb/d, but the cuts are slated to expire at the end of July, which is likely to reduce from 9.7Mb/d to 7.7Mb/d.
Reopening of economies in Europe and other parts of the world had triggered an increase in oil demand, but increases in the number of coronavirus cases in other large oil consumers, including the United States, Brazil, and India are projected to offset those European increases, according to Rystad.
In the Rystad report, oil demand would lower by 3.77Mb/d lower for the remainder of 2020, compared to the above base-case scenario, if full lockdowns are re-implemented globally due to increases in the coronavirus.
According to the group, when a second wave causes widespread full lockdowns, oil demand will not be as hampered as it was back in April when the virus first shocked the oil markets. This, Rystad suggests, is because the world is now armed with better information with which it could implement more targeted lockdowns and handle increased infections. Also at play is the fact that the economy simply cannot handle another “economic meltdown”.
The group expects oil demand to average 90.27Mb/d in July; 90.67Mb/d in August; September, and October; 937Mb/d in November; and 94.77Mb/d in December. This compares to oil demand of more than 997Mb/d last year.
Rystad stated that full-year 2020 oil demand would average 89.77Mb/d, with 2021 demand averaging 97.17Mb/d still under the 2019 average.
According to the body, oil demand may not snap back until the end of 2022, when it sees aviation activity as fully recovered.