The energy research and business intelligence firm is now forecasting a fall in demand for oil of 600,000 barrels per day (bpd) year-on-year, equivalent to a decrease of 0.6%.
The company’s estimate of total oil demand in 2019, about 99.8m bpd, is now projected to fall to 99.2m bpd. Describing the new figures as ‘a severe downgrade’, Rystad cites the quarantine lockdown in Italy, flight cancellations by airlines, the travel ban between Europe and the US announced by President Trump on Wednesday, and the firm’s simulations of possible virus growth patterns this year as the basis for the new numbers.
Jet fuel is likely to be hit hardest. Rystad expects that global air traffic will fall by about 16% this year compared with 2019 when the firm’s analysis indicated a total of about 190,000 flight per day. This figure included commercial, cargo and private flights as well as helicopters. The company’s estimates prior to the onset of the virus forecast that total flights this year would rise to an average of 200,000 per day.
Demand for road fuel is likely to remain flat, Rystad said, compared with its earlier estimate of an increase from 49.7m b/d to 50.3m b/d, a hike of 1.2%. Chinese demand alone for road fuel in February fell by 1.5m b/d although traffic in the country is now gradually returning to more normal levels.
However, Rystad expects a growing number of cities, besides those in Italy, to implement quarantines and travel restrictions which could lead to a reduction in demand equivalent to approximately half of what has been seen in China. However, the firm noted that the length of quarantines in Europe remains uncertain.
Brent crude lost a further 8% yesterday, closing at about $33 in London. West Texas Intermediate also fell, with a price hovering around $31 by the London close. Meanwhile very low sulphur fuel oil fell by $31.50 per tonne in Singapore, closing the day at $325.50. according to figures from Ship & Bunker.
In contrast, heavy fuel oil prices rose slightly, up $1.50 on the day and closing at $229.50 in Singapore. The figures demonstrate a continuing reduction in the price differential between the two fuels, a key metric in assessing the viability of scrubber investments.
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