New York (Reuters)-This year is the same as other oil prices.
Even if the global price was close to US$51 per barrel at the end of the year, which was close to the 2015-2017 average, it covered a year of turbulence. In April, U.S. crude oil fell to a negative territory, and Brent crude oil fell below $20/barrel, affected by the COVID-19 pandemic and the price war between oil giants Saudi Arabia and Russia.
As the pandemic destroyed fuel demand around the world, the rest of 2020 is used to recover from the decline. Although the possibility of U.S. oil futures falling below the negative $40 per barrel in the short term is unlikely to happen again in 2021, the new ban on sales and the phased introduction of a vaccine to treat this virus will limit demand next year and beyond .
Peter McNally, global head of industry, materials and energy at the research company Third Bridge, said: “We really haven’t seen anything like this-not during the financial crisis, nor after 9/11.” “The impact on demand is Huge and fast.”
Graphic: World oil consumption declines in 2020-
Graphic: World oil demand is falling here
Even after the pandemic, as countries seek to limit emissions to slow climate change, demand for fossil fuels may still be weak in the coming years. Major oil companies such as BP Plc and Total SE have issued forecasts that include the situation that global oil demand may reach its peak in 2019.
The Energy Information Administration said that the world’s oil and liquid fuel production dropped from 10.61 million barrels per day in 2019 to 94.25 million barrels per day in 2020. It is expected that next year’s production will only recover to 97.42 million barrels per day.
Texas oil producer Teal Natural Resources LLC (Teal Natural Resources LLC) Dallas CEO John Roby (John Roby) said: “Every cycle I go through feels the worst, but it’s a The process of confusion.”
Graphic: World oil production drops-
With the spread of coronavirus cases, the government implemented lockdown measures to keep residents indoors and away from roads. According to EIA, the global consumption of crude oil and liquid fuels dropped to 92.4 million barrels per day this year, a decrease of 9% from 101.2 million barrels per day in 2019.
The changing landscape poses a threat to refineries. Morgan Stanley said that approximately 1.5 million barrels per day of processing capacity has been withdrawn from the market.
According to GlobalData data, global crude oil distillation capacity is expected to continue to increase, but declining demand for gasoline, diesel and other fuels and lower profit margins have prompted refineries in Asia and North America to close or cut production, including some on the Gulf Coast of the United States. facility.
In its September outlook, BP stated that the closure of more advanced economies “increased the refinery’s exposure to highly competitive product export markets.”
Chart: Gasoline profit margins are sluggish in 2020-
Chart: Refining margins affect the market here
There may be volatility in the coming months, as investors weigh in between sluggish demand and the possibility of another surge in oil supplies from producers, including the Organization of the Petroleum Exporting Countries (OPEC) and allies.
An analyst from Mitsubishi UFJ Financial Group said: “In the past 12 months, the market has been turbulent and has far-reaching impact, because we have begun to form a new contour of the normal posture of balanced development after the virus.”
The Cboe crude oil ETF volatility index surged to a record 517.19 in April. Refinitiv Eikon data shows that the index has fallen to around 40, but it is still about 60% higher than the same period a year ago.
Graph: rising oil volatility-