COVID-19 demand update: Oil seen down 10.8%, jet fuel down 33.6%, road fuel down 11.2% in 2020

Source: press release, 30 April 2020

Global oil demand impact of COVID-19, total demand (up), losses (down) (source: Rystad Energy OilMarketCube)
Global oil demand impact of COVID-19, total demand (up), losses (down) (source: Rystad Energy OilMarketCube)

Rystad Energy’s weekly comprehensive COVID-19 report calculates the effect of the novel coronavirus in 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, Rystad Energy is making frequent updates to most of its estimates.

Below are some of Rystad Energy’s forecasts from the just-published eighth edition of the report. Note that some historical numbers may differ from week to week as governments revise their official figures.

Global oil demand:
In another consecutive revision of the weekly estimates, Rystad Energy’s newest forecast for oil demand now projects a decrease of 10.8% for 2020, or 10.7 million barrels per day (bpd) year-on-year. The estimates show that total oil demand in 2019 was approximately 99.5 million bpd, which is now projected to decline to 88.8 million bpd in 2020. To put the number into context, last week Rystad Energy projected a decrease to 89.2 million bpd.

At the moment, Rystad Energy expects the month of April to take the biggest hit, with demand for oil estimated at 71.8 million bpd, a 27.1% drop. Similarly, May’s demand is expected to fall by 21.4% to 77.6 million bpd. June’s demand is forecast at 83.7 million bpd, down by 14.9%.

This downgrade takes into account developments that have occurred up to and including Tuesday, 28 April.

Road fuel demand:
Rystad Energy believes that total global demand for road fuels will fall by 11.2%, or by 5.3 million bpd year-on-year, a slight downgrade from last week’s report where road fuels were expected to decline by 10.5%.

Road fuel demand in 2019 is estimated to have been 47.4 million bpd, and is now seen reaching only about 42.1 million bpd in 2020.

Most of this reduction will take place in April, which will see road fuel demand limited to just 31.7 million bpd globally, a 33% drop. May’s road fuel demand is now estimated at 36.6 million bpd, down by 22.8%. June’s road fuel demand is now forecast to reach 40 million bpd, down by 15.6%.

Jet fuel demand:
Among the various fuel sectors, Rystad Energy expects jet fuel to be hit the hardest. The analysts expect global commercial air traffic will fall by at least 31% this year versus the levels seen in 2019, which Rystad Energy estimates stood at around 99,700 flights per day. This number will be revised as operators continue to cut routes.

Many distressed airlines are now facing heavy cost cuts and are laying off unprecedented numbers of employees as many non-essential routes are closed.

As a base case Rystad Energy now assumes that the common summer air travel peak will not occur at all this year. Global jet fuel demand is expected to fall by almost 33.6% year-on-year, or by at least 2.4 million bpd. Last year’s demand for jet fuel was about 7.2 million bpd.

Jet fuel demand in April will be as low as 2.1 million bpd, and it will shrink further to 1.9 million bpd in May.

Regional demand figures:
Total oil demand in the United States for 2020 is now forecast to fall by 2.2 million bpd to 18.3 million bpd, a 10.7% decline from 2019’s 20.5 million bpd. April will see a decline of 30.8%, with demand falling to 13.9 million bpd. May will see a decline of 24%, with demand falling to 15.4 million bpd. June’s demand is estimated to also decline by 16.8% to 17.1 million bpd.

US road fuel demand in 2020 will fall by 1.2 million bpd, a 10.7% decline to 10.0 million bpd from last year’s 11.2 million bpd. April will see a decline of 37%, with demand falling to 7.1 million bpd. May will see a decline of 24.5%, with demand falling to 8.6 million bpd. June’s road fuel demand will fall by 17% to 9.6 million bpd.

Total oil demand in Europe for 2020 is now forecast to fall by 1.7 million bpd to 12.5 million bpd, a 12.4% decline from 2019’s 14.2 million bpd. April will see a decline of 34%, with demand falling to 9.6 million bpd. May will see a decline of 26,5%, with demand falling to 10.3 million bpd. June’s demand will fall by 19.6% to 11.4 million bpd.

Europe’s road fuel demand in 2020 will fall by 0.7 million bpd, a 10% decline to 6.3 million bpd from last year’s 7.0 million bpd. April will see a decline of 34.7%, with demand falling to 4.6 million bpd. May will see a decline of 24.4%, with demand falling to 5.2 million bpd. June’s demand will decline by 16.5% to 5.9 million bpd.

Total oil demand in China for 2020 is now forecast to fall by 1.3 million bpd to 12.4 million bpd, a 9.5% decline from 2019’s 13.7 million bpd. April will see a decline of 4.9%, with demand falling to 12.4 million bpd. May will see a decline of 12.4%, with demand falling to 12.4 million bpd. June’s demand will fall to 13 million bpd, a 1.1% drop.

China’s road fuel demand in 2020 will fall by 0.4 million bpd, a 7.5% decline to 4.9 million bpd from last year’s 5.3 million bpd. April will see a decline of 6.6%, with demand falling to 4.7 million bpd. May will see a decline of 12.6%, with demand falling to 4.9 million bpd. June’s demand will fall by 2.2% to 5.1 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 will adjust its numbers weekly for every new dramatic step taken by governments to slow the spread of COVID-19.

The latest updated version of the report will always be publicly accessible at https://www.rystadenergy.com/globalassets/pdfs/rystad-energy_covid-19-report_29-april_2020_public-version.pdf