Oil demand around the world will not return to the pre-virus levels of 2019 until the fourth quarter of 2021, as countries will be slowly emerging from the lockdowns and the economic recession, according to Morgan Stanley.
In addition, the post-coronavirus world could see some lasting structural changes in consumer behavior, Martijn Rats, head of oil research at Morgan Stanley, told Reuters.
“The demand recovery will be somewhat muted, and we could see some structural changes to people’s behaviour,” Rats told reporters.
Analysts argue that oil demand is not set to stage a quick V-shaped recovery as restrictions and lockdowns will be eased gradually, while many economies will be in recession this year.
According to the International Energy Agency’s (IEA) latest monthly report for April 2020, the demand loss due to the coronavirus pandemic could result in a stock build of 12 million barrels per day (bpd) in the first half 2020, despite the OPEC+ decision to cut collective production by 9.7 million bpd in May and June. The historic OPEC+ production cut deal may have prevented a total disaster in the oil market, but it will be unable to stave off the impending global oil inventory build that is threatening to fill all the available storage in the world over the next few weeks, the IEA said in the middle of April.
According to Goldman Sachs, the oil market is set to test the limits of the global storage capacity within three to four weeks. As much as 20 percent of the world’s oil production needs to be shut in so that supply and demand could balance in the short term, Goldman Sachs said in a note this week carried by Bloomberg.
By Tsvetana Paraskova for Oilprice.com
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