2020 may see largest decline in global oil consumption since 1990

Oil&Gas Materials 8 April 2020 11:42 (UTC +04:00)
2020 may see largest decline in global oil consumption since 1990

BAKU, Azerbaijan, Apr.8

By Leman Zeynalova – Trend:

For 2020, the US Energy Information Administration (EIA) estimates that global liquid fuels consumption will average 95.5 million b/d, down 5.2 million b/d (5.2 percent), Trend reports citing EIA’s April Short-term Energy Outlook (STEO).

“If realized, 2020 would see the largest year-over-year percentage decline in global oil consumption since at least 1990, the year EIA began tracking global consumption levels,” reads the report.

In the United States, EIA forecasts that total oil consumption will decline 6.5 percent in 2020 to average 19.1 million b/d, which would be the largest percentage decline in consumption since 1980 and the second-largest decline since 1949, the earliest EIA data available.

Aside from these significant changes to oil demand, EIA expects global oil supply to remain near first-quarter 2020 levels in the coming months.

“Upstream supply projects from countries outside the Organization of the Petroleum Exporting Countries (OPEC) require years of development and, once brought online, continue producing in low oil price environments as operating costs per barrel are generally low. However, EIA forecasts that low oil prices will immediately reduce U.S. Lower 48 crude oil production in the second quarter of 2020 as drilling activity slows significantly. In addition, as a result of OPEC and partner countries no longer restraining production, several OPEC members have begun increasing crude oil production by bringing previously idle spare production capacity online and selling additional crude oil from storage,” the report says.

EIA estimates that second-quarter 2020 global petroleum inventories will increase at an average rate of 11.4 million b/d, which would be the largest rate of inventory increases since EIA record keeping began.

“Within the Organization for Economic Cooperation and Development (OECD), the highest stock levels recorded dating back to 2003 was in July 2016, when total commercial petroleum inventories ended the month at slightly more than 3.1 billion barrels.”

EIA forecasts inventories will surpass this level, but it remains uncertain how much commercially available storage capacity exists globally, particularly in non-OECD countries.


Follow the author on Twitter:@Lyaman_Zeyn