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Bloomberg warns of largest drop in oil demand in history

US, WASHINGTON (NEWS OBSERVATORY) — In 2020, global oil demand risks showing the largest drop in history due to coronavirus and measures to prevent its spread, Bloomberg agency writes following an expert survey.

“Travel bans, work from home, canceled vacations and broken supply chains – all this means a decrease in fuel demand. As society continues to respond to the virus, oil demand <…> continues to fall,” the agency writes.

So, traders are growing concerns that oil demand, which amounted to just over 100 million barrels per day in 2019, this year will show the maximum drop in history.

The decline could be more than the level of almost a million barrels per day recorded during the recession in 2009, and even 2.65 million barrels, as happened in 1980, when the world economy crashed after the second oil crisis.

Moreover, some traders believe that oil prices may slide to unambiguous values, which have not been since the time of the price war between Saudi Arabia and Venezuela in 1997-1999.

“We have never seen such a situation with demand in history,” the agency quoted Saad Rahim, chief economist at the Trafigura Group as a trader. “We will see an extremely sharp decline in demand,” said Giovanni Serio, chief economist at trading Vitol Group, also quoted by Bloomberg.

Goldman Sachs predicts that from February to April, oil demand will be reduced by more than four million barrels per day per month, according to the material. Other investors expect an even worse deal.

So, according to estimates by the Andurand fund, demand may fall by ten million barrels per day in the first quarter and even beyond.

In turn, Trafigura also expects that demand for oil will soon reach a decline of ten million barrels per day. Although this forecast, as the agency notes, is only for the short term, not quarterly or annual.

At the same time, consulting IHS Markit predicts a decrease in demand by 1.42 million barrels on average for the year or even 2.8 – in the worst case scenario. And another consulting company, FGE, believes that the drop in 2020 will be 1.3 million barrels per day.

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Article is written and prepared by our foreign editors from different countries around the world – material edited and published by News Observatory staff in our US newsroom.

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