Demand for petroleum products will never reach pre-crisis levels
Demand for petroleum products will never return to levels achieved before the coronavirus outbreak, Citigroup notes.
Analysts, including Ed Morse, write that as the global economy resumes, fewer people will fly and use your cars. As noted in the report, due to the fact that meetings are becoming virtual, and business no longer needs to move employees around the world, as before, there will be powerful forces that repel the transition from oil.
At its peak, the virus destroyed before 30% of total oil demand, and the market is still recovering. The report came a few days after Royal Dutch Shell warned of a record decline in the value of its assets after it lowered its view on long-term oil and gas prices, while BP Plc also took similar steps. Citi said that in the long run, oil is likely to be priced at $ 45, rather than $ 60 per barrel.
“The growth in demand for petroleum products will slow significantly, change its outlines and will never return to growth rates until 2019.” They said.
With a more pessimistic approach to demand, Citi also warned those who hope to return $ 100 per barrel of oil.
Oil for $ 100
Some say the market is getting ready for such an opportunity, which is due to the reduction in expenses of large energy companies in connection with the defeat of oil prices and geopolitical risks in some of the world's largest producing countries.
But with a return of the price of $ 45 per barrel, a decrease in long-term delivery costs for in recent years and with a large number of deliveries that are already offline with political risks, three-figure oil “has far more imagination than reality.”
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