OPEC+ have agreed to cut output by 9.7 MMBD in May and June, representing about 10% of global supply. In addition, several other countries will reduce output as well, for an estimated total cut of about 19.5 MMBD.
Shale producers and oil majors are also reducing production, U.S. rig count continued to decline due to crude oil price crashed down.
Less crude oil output from Iran and Venezuela due to U.S. sanctions.
Global economy plunges into recession as pandemic continues to spread. Lockdowns enforced across the world. Borders closed in most countries. Oil demand will shrink approx. by record 23 MMBD in Q2’20.
Lack of available storage to deal with a coronavirus-induced collapse in demand.
Market Highlights in 2020:
Several countries and regions are relaxing lockdowns put in place to contain the virus. Expected oil demand recovering after Covid-19 impact.
OPEC+ to continue its production cut Agreement. Shale producers and oil majors are also reducing production
Middle East crude supply concerns as geopolitical tension between U.S. and Iran.
With the devastating COVID-19 spreading across the world, IEA now expects global oil demand to decline by 9.3 MMBD y-o-y in 2020.
Trade tension between U.S. & China impacting to world economic and oil demand.
Gasoil crack will be pressured as market concerns over Covid-19 pandemic trigger economic downturn and demand continue to hold back due to fears of a second wave of pandemic. Refinery run cuts and maintenance schedule in Asia should partially offsets the excess output.
Gasoline crack will be pressured by low demand effected from Covid-19 amid travel restrictions and lockdown. Expected global gasoline demand should fall by 5.2 mmb/d y-o-y in 2Q 2020.
Fuel oil crack will be supported by supply tightness and crude price floor, however will be pressured by bunker demand drop off amid the ongoing Covid-19 crisis. Bunker demand faces a sharp pullback due to shipping activities.
Market Highlights in 2020:
Expected manufacturing and industrial recovering after Covid-19 impact.
The Fuel Oil’s supply in the worldwide will be continued to fall on the back of continued refinery modernization and implementing 0.5%S bunker.
Expected growth in Middle Distillate consumption will recover after Covid-19 under control.
HSFO will be replaced by Marine Gasoil and Low-Sulfur Fuel Oil.
Asia continues to have the amount of new refinery capacity expected, almost 0.5 MBD by 2020.
