Global oil demand drops
The International Energy Agency (IEA) anticipates a sharper contraction in global oil demand in 2020. The ongoing uncertainty around demand caused by the health crisis produces that the oil market’s rebalancing remains delicate.
There is an estimative fall of global oil supply by 7.1m bpd this year and then a tentative increase by 1.6m bpd in 2021, assuming the Opec+ cuts remain in place as agreed and with full compliance from all participants.
The aviation and road transport sectors, both essential consumers of oil consumption, are continuing to struggle as a result of the sanitary emergency. The IEA estimates jet fuel and kerosene demand to contract by 39% compared with 2019, followed by a small rise of approximately 8% for next year.
Besides, crude oil trade volumes have been a mixed bag so far this year. The vast supply surpluses in the market earlier this year saw short-term floating storage rise to an all-time high 220.5m barrels in June. A crucial contribution to this stock build was the discharge backlog in Chinese ports, which only began to clear starting around mid-July. However, as the market rebalances and the forward price curve flattens, floating storage of crude oil fell by 35.7m barrels in June, to 184.8m barrels in July.
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