A surge in new cases in parts of the world and a resurgence of the coronavirus in places that had thought they’d beat it are leading to renewed lockdowns and worry that the recovery in oil demand, already hesitant, might end, Reuters reports.
GasBuddy data, for instance, shows that gasoline demand in the world’s top consumer fell by 5 percent on the week in the seven days to July 11. Meanwhile, new Covid-19 case numbers in the U.S. have been rising fast: yesterday, the country broke all records by reporting 77,000 new cases. The number of deaths, however, is falling.
These latest developments have prompted state officials to threaten new lockdowns, despite concern about what would happen to the recovery of the economy if lockdowns return.
At the same time, people are once again driving less when they should be driving more as this is the height of driving season in the northern hemisphere. In fact, Rystad Energy recently forecast that fuel demand in the United States would fall by some 1.1 million bpd this year, to 10.1 million bpd, the Houston Chronicle reported in early June.
Since then, infections have risen and so have fears about a return of the lockdowns. This means the actual decline in fuel demand could end up being even larger than 1.1 million bpd, especially if the country fails in bringing the disease under control as the population remains divided on things like the benefits of wearing masks in public spaces.
Indeed, in a July report, Rystad Energy said it expected global oil demand to shed another 2.5 million in addition to earlier projections because of the danger of a possible second wave of infections.
In the U.S., demand for gasoline fell for two straight weeks in July, when it was supposed to be rising the most. Reuters notes that this coincided with a sharp increase in new Covid-19 cases in some of the most populous states, which together account for more than 25 percent of total gasoline consumption.
By Irina Slav for Oilprice.com
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