With billions of people worldwide under some form of lockdown, oil demand may fall as much as 20 million b/d at some stage this year, the International Energy Agency’s Executive Director, Fatih Birol, said last week.
The massive collapse in oil price comes just months after Guyana became an oil producing nation with the ExxonMobil-operated 120,000 bpd Liza Phase 1 Development project.
Research group JBC Energy said Friday it had “drastically” reduced its 2020 oil demand forecast, and expected a decline of over 7.4 million b/d.
The same day, S&P Global Platts Analytics said it expected oil demand to shrink by a record 16 million b/d in April and average 4.5 million b/d lower year-on-year in full-year 2020.
“The worst is still ahead for oil prices…This will be the worst demand contraction ever recorded. Despite that, the outlook remains under negative watch,” S&P Global Platts Analytics said.
It said it saw Brent crude averaging $12/b in May, but “prices could easily dip into the single digits, whatever it takes to get significant supply off the market and quickly”.
Norwegian consultants Rystad Energy said Monday it expected to further cut its latest estimates of a 16 million b/d oil demand loss estimate for April.
“The oil market supply chains are broken due to the unbelievably large losses in oil demand, forcing all available alternatives of supply chain adjustments to take place during April and May,” Rystad said in a note.
Goldman Sachs said it saw Brent crude staying near cash costs of $20/b with “temporary spikes below”, adding “landlocked” benchmark crudes such as US WTI could be hit harder.
While Brent crudes in the North Sea are accessed by tankers, landlocked pipeline crudes from US, Russia and Canada are more vulnerable to regional backlogs, further depressing their price, analysts Jeff Currie and Damien Courvalin said in a note.
Predictions over collapsing global oil demand due to the spread of coronavirus are continuing to spiral, further depressing oil price forecasts, after the US extended its latest lockdown guidance.