April to take the biggest hit in oil demand
BAKU, Azerbaijan, March 26
By Leman Zeynalova – Trend:
Oil demand now projects a decrease of 4.9 percent for 2020, or 4.9 million barrels per day (bpd) year-on-year, Trend reports with reference to Rystad Energy, an independent energy research and business intelligence company.
“Our estimates show that total oil demand in 2019 was approximately 99.9 million bpd, which is now projected to decline to 95.0 million bpd in 2020. To put the number into context, last week we projected a decrease of just 2.8 million bpd,” the company said in its report.
At the moment Rystad Energy expects the month of April to take the biggest hit, with demand for oil falling by nearly 16 million bpd year on year, almost a 16 percent drop.
“This downgrade takes into account developments that happened within the course of last week such as the new quarantine lockdowns across the world, including India’s newly announced 21-day curfew,” said the company.
Rystad Energy believes that global total demand for road fuels will fall by 5.6 percent, or 2.8 million bpd year-on-year, a strong downgrade from last week’s report, where road fuels were expected to decline by just 2.2 percent.
“Road fuel demand in 2019 is estimated to have reached 49.7 million bpd. Prior to the coronavirus we expected this demand segment to grow to 50.3 million bpd in 2020, but we now see it reaching only about 46.9 million bpd,” reads the report.
A different and possibly better way to digest the effect of COVID-19 in road fuel demand is to exclude road freight, which is little affected, according to the company.
The report shows that calibrating the demand this way, the adjusted road fuel demand will only amount to 45.5 million bpd this year comparing with 2019’s 47.7 million bpd.
“Most of this reduction will also take effect in April, which will see its adjusted road fuel demand being limited to just 39 million bpd globally, from about 50 million bpd a year ago,” the company said.
Among the various fuel sectors, Rystad Energy expects jet fuel to be hit the hardest.
“We expect global commercial air traffic will fall by at least 8 percent this year versus the levels seen in 2019, which we estimate stood at around 99,700 flights per day. This number includes only announced short-term cancellations and will be revised as operators continue to cut routes.”
As a base case the company now assumes that the common summer air travel peak will not occur at all this year.
“We now see jet fuel demand falling by almost 20 percent year-on-year, or by at least 1.4 million bpd. Last year’s demand for jet fuel was seen at about 7.2 million bpd. Although jet fuel demand declines by 20 percent we see only an 8 percent drop in flight traffic at present. This is due to the fact that most of the flights cut are the long-haul flights that are more fuel-intensive.”
For April, the decline in jet fuel demand will average at as low as 4.1 million bpd, according to the company.
Follow the author on Twitter:@Lyaman_Zeyn