COVID-19 demand update: Oil seen down 10.9%, jet fuel down 33.6%, road fuel down 11.1% in 2020

Source: press release, 7 May 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 ninth 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 Rystad Energy’s weekly estimates, the newest forecast for oil demand now projects a decrease of 10.9% for 2020, or 10.8 million barrels per day (bpd) year-over-year. Estimates show that total oil demand in 2019 was approximately 99.5 million bpd, which is now projected to decline to 88.7 million bpd in 2020. To put the number into context, last week Rystad Energy projected a decrease to 88.8 million bpd.

April’s demand for oil was estimated at 71.8 million bpd, a 27.1% drop. Similarly, May’s demand is expected to fall by 21.3% to 77.7 million bpd. June’s demand is forecast at 83.5 million bpd, down by 15.0%.

Further ahead, total oil demand in 2021 is expected to average at 98.8 million bpd.

This downgrade takes into account developments that have occurred up to and including Tuesday, 5 May.

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-over-year, unchanged from last week’s report.

Road fuel demand in 2019 is estimated to have been 47.4 million bpd. Rystad Energy now sees it reaching only about 42.1 million bpd in 2020.

Most of this reduction took place in April, which saw road fuel demand limited to just 31.7 million bpd globally, a 33% drop. May’s road fuel demand is now estimated at 36.8 million bpd, down by 22.3%. June’s road fuel demand is now forecast to reach 40 million bpd, down by 15.6%.

In 2021, road fuel demand is expected to average at 47.1 million bpd.

Jet fuel demand:
Among the various fuel sectors, Rystad Energy expects jet fuel to be hit the hardest. Global commercial air traffic is expected to 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 projected to fall by almost 33.6% year-over-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 was as low as 2.1 million bpd and will shrink further to 1.9 million bpd in May before rebounding to 3 million bpd in June.

In 2021, jet fuel demand is expected to average at 6.9 million bpd.

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 saw a decline of 30.8%, with demand falling to 13.9 million bpd. May will see a decline of 24%, with demand falling to 15.6 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 saw a decline of 37%, with demand falling to 7.1 million bpd. May will see a decline of 22.5%, with demand falling to 8.8 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 saw 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 saw a decline of 34.7%, with demand falling to 4.6 million bpd. May will see a decline of 24.0%, with demand falling to 5.3 million bpd. June’s demand will decline by 16.5% to 5.9 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 is publicly accessible at: www.rystadenergy.com/globalassets/pdfs/rystad-energy_covid-19-report_6-may_2020_public-version.pdf