As public health security incidents spread around the world, countries have taken control measures one after another. Oil demand is expected to see a record drop. Goldman Sachs predicts that demand will fall by more than 4 million barrels per day from February to April, while well-known oil traders Pierre Andurand and Trafigura are more pessimistic, believing that the decline may be as high as 10 million barrels per day.
Countries have taken measures to deal with public health and safety incidents, and oil demand has been impacted as a result
As more and more countries take advanced measures to deal with the outbreak of public health security incidents, global oil consumption is in free fall and may hit the largest annual decline in history. Travel bans, working from home, canceled holidays and supply chain disruptions all mean lower demand for oil. As countries around the world respond to public health security incidents, oil demand is falling further. In fact, oil traders, executives, hedge fund managers and consultants are slashing demand forecasts.
The average oil demand in 2019 exceeded 100 million barrels per day. However, many traders are now increasingly concerned that 2020 could see the largest drop in oil demand in history, easily surpassing the nearly 1 million barrels per day drop during the Great Recession in 2009 and even greater than the drop after the second oil crisis in 1980. , a drop of 2.65 million barrels per day when the global economy collapsed.
Pierre Andurand, head of oil hedge fund Andurand Capital Management, said: “Since 1918, it has never been a phenomenon for a public health security event to spread to the world. But we are unlikely to see a drop in demand. Recording several times the decline during the global financial crisis.”
The public health security incident has had a negative impact on the global economy. Saudi Arabia and Russia have entered a full-scale price war and increased oil supply. Oil prices have fallen so far this year Nearly 50%.
Brent oil prices plummeted 20% last Monday, the largest one-day drop since the 1991 Gulf War. Some traders privately believe oil prices could fall into single digits for the first time since the 1997-99 price war between Saudi Arabia and Venezuela.
Saad Rahim, chief economist at oil trading giant Trafigura group, said: “We have never seen a severe hit to oil demand in history. For some time, the demand side of oil has been changing day by day. Everything is getting worse.”
Institution: Under extreme circumstances, oil demand may fall by 10 million barrels per day
Famous investment bank Goldman Sachs now predicts that oil demand will fall by more than 4 million barrels per day from February to April this year, and other institutions believe that short-term oil demand declines may be even greater. Well-known oil trader Pierre Andurand estimates that oil demand could easily fall by 10 million barrels per day in the first quarter of this year and beyond.
Giovanni Serio, chief economist of Vitol Group, warned: “We will see a sharp decline in oil demand. Because of the outbreak of public health security incidents, as European and American governments take measures to A sharp drop in oil demand amid various control measures also provides a window into deteriorating world economic conditions. Rumors of reduced oil demand are everywhere: German airline Lufthansa said it may cancel up to 70% of its flights in the coming days Quantity.”
In the world’s most congested cities, such as Seattle, Milan and Madrid, people are traveling fewer miles, according to data from Tom International BV. Data from OpenTable, an online restaurant reservation service, shows restaurant reservations in New York, Boston, San Francisco and Seattle are down 50% compared with a year ago. Italy and Spain have also adopted effective restrictions, affecting more than 100 million people, and several other European countries have also closed schools. In the United States, some states are also taking action and canceling almost all social events.
For the oil market, the impact of public health security incidents on demand is obvious. Among the world’s top three independent oil traders, Trafigura has the most pessimistic forecast for oil demand. Trafigura predicts that oil consumption may soon fall by nearly 10 million barrels per day, accounting for 10% of global demand, and the decline may expand. The agency’s forecast is for a relatively short period of time, rather than a quarterly or annual forecast, but points to a sudden drop in oil consumption.
Oil consultancies have significantly lowered their demand forecasts over the past two days. IHS Markit believes that average oil consumption will fall by 1.42 million barrels per day this year, while in a worse-case scenario, consumption will fall by 2.8 million barrels per day. Another oil consultancy, FGE, now forecasts that oil consumption will fall by an average of 1.3 million barrels per day throughout 2020. The International Energy Agency stated on March 9 that oil demand in 2020 will only decrease by about 90,000 barrels per day.
From the above information, we can see that with the spread of public health and safety incidents, institutions have become increasingly pessimistic about the prospects for oil demand. This is undoubtedly a huge negative factor for oil prices, and it is very difficult to rise in the short term. big.
Brent oil price daily chart</p
