Lockdowns and travel restrictions will result in an oil demand loss of 18.5 million bpd in April, with demand for the full-year 2020 expected to slump by a record 5.43 million bpd on average, Standard Chartered said in a note on Tuesday, as carried by Reuters.
The response of governments around the world to contain the coronavirus pandemic has prompted the bank to further revise down its outlook on global oil demand this year.
Just three weeks ago, banks and international organizations, including OPEC and the International Energy Agency (IEA), expected this year's oil demand flat or slightly down compared to last year's.
But the spread of the Covid-19 and the tight travel restrictions have led to downward revisions in demand outlooks by the day. Current expectations for the demand loss in April are now close to 20 million bpd of oil demand wiped out-this would be a 20-percent plunge in the typical 100-million-bpd global oil demand.
Standard Chartered had expected earlier global oil demand to plummet by 10.5 million bpd in April 2020 compared to April 2019, but now has revised that estimate further down, to an 18.5-million-bpd plunge.
"Tighter mobility restrictions as part of government coronavirus responses have worsened our outlook on the oil demand shock," Reuters quoted the bank's note as saying.
Standard Chartered also expects huge oil glut over the next three months, at least, which is set to overwhelm available storage by the middle of May. The bank sees 21.8 million bpd of oil surplus in April, 19.5 million bpd in May, and 13.7 million bpd in June.
With the world running out of storage and producers having unequal access to storage sites or tanks, producers of crude grades in landlocked areas may soon see themselves paying consumers to take their oil away. Faced with negative prices, many would resort to shut-ins, analysts say.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More