2020’s oil recovery seen a bit slower, 2021 demand cut

OSLO — The Rystad Energy’s weekly comprehensive COVID-19 report calculates the effect of the novel coronavirus on our lives and offers updated estimates for global fuel markets.

As a result of recent developments, with travel restrictions, quarantine obligations and new government policies announced daily around the world, we are making frequent updates to most of our estimates.

Below are some of our forecasts from the just-published 12th edition of the report. Please note that some historical numbers may differ from week to week as governments revise their official figures.

Global oil demand:

In another consecutive update of our weekly estimates, our newest forecast for oil demand now projects a decrease of 11.5% for 2020, or 11.4 million barrels per day (bpd) year-on-year. Our estimates show that total oil demand in 2019 was approximately 99.5 million bpd, which is now projected to fall to 88.1 million bpd in 2020.

May demand is expected to fall by 20.5% to 78.5 million bpd. June demand is forecast at 84 million bpd, down by 14.5% year-on-year. Further ahead, total oil demand in 2021 is expected to average at 96.3 million bpd. This update takes into account developments that have occurred up to and including Tuesday, May 26.

Road fuel demand:

We believe that total global demand for road fuels will fall by 9.9% in 2020, or by 4.7 million bpd year-on-year, landing a bit higher than what we estimated in last week’s report. Road fuel demand in 2019 is estimated to have been 47.4 million bpd. We now see it dropping to about 42.7 million bpd in 2020.

Most of this reduction took place in April, which saw road fuel demand limited to just 31.8 million bpd globally, a 32.8% drop. May road fuel demand is now estimated at 37.6 million bpd, down by 20.8%. June road fuel demand is now forecast to reach 41.5 million bpd, down by 12.5%. In 2021, road fuel demand is expected to average at 46 million bpd.

Jet fuel demand:

Among the various fuel sectors, we expect jet fuel to be hit the hardest. We expect global commercial air traffic will fall by at least 49.1% this year versus the levels seen in 2019, which we estimate stood at around 99,700 flights per day. For 2021, we expect around 76,800 flights per day. These numbers will be revised as operators continue to cut routes.

Many distressed airlines are facing heavy cost cuts and are laying off unprecedented numbers of employees as many non-essential routes are closed. As a base case we now assume that the common summer air travel peak will not occur at all this year. We see global jet fuel demand falling by almost 40.8% year-on-year, or by at least 2.9 million bpd. Last year’s demand for jet fuel was about 7.2 million bpd.

Jet fuel demand in April was as low as 3 million bpd and will shrink further to 2.8 million bpd in May, before rebounding to 3.1 million bpd in June. In 2021, jet fuel demand is expected to average 6.2 million bpd.

Regional demand figures:

Total oil demand in the United States for 2020 is now forecast to fall by 2.4 million bpd to 18.1 million bpd, an 11.8% decline from 2019’s 20.5 million bpd. April saw a decline of 30.8%, with demand falling to 13.9 million bpd. May will see a decline of 22.6%, with demand falling to 15.7 million bpd. June demand is estimated to decline by 17.8% to 16.9 million bpd.

US road fuel demand in 2020 will fall by 1.1 million bpd, a 10.5% decline to 10.1 million bpd from last year’s 11.2 million bpd. April saw a decline of 39%, with demand falling to 6.9 million bpd. May will see a decline of 20.5%, with demand falling to 9 million bpd. June’s road fuel demand will fall by 15.1% to 9.9 million bpd. In 2021, total oil demand in the US is expected to average 19.4 million bpd and road fuel demand 10.6 million bpd.

Total oil demand in Europe for 2020 is now forecast to fall by 2.2 million bpd to 12 million bpd, a 15.6% decline from 2019’s 14.2 million bpd. April saw a decline of 36.2%, with demand falling to 9.2 million bpd. May will see a decline of 27.3%, with demand falling to 10.2 million bpd, while June demand will drop by 19.1% to 11.5 million bpd.

Europe’s road fuel demand in 2020 will fall by 0.8 million bpd, a 12% decline to 6.2 million bpd from last year’s 7.0 million bpd. April saw a decline of 42.7%, with demand falling to 4.1 million bpd. May will see a decline of 27.2%, with demand falling to 5 million bpd. June demand will decline by 14.8% to 6 million bpd. In 2021, total oil demand in Europe is expected to average at 13.2 million bpd and road fuel demand at 6.6 million bpd.

Other report findings:

Aside from energy-related projections, the COVID-19 Report also includes general estimates regarding the spread and development of the pandemic globally, including forecasts regarding how the virus will evolve in the most affected countries. — Rystad Energy