Analysts and oil market watchers said growing concerns on a resurgence in COVID-19 cases forced them to rethink their oil demand forecast. The US, India, and Brazil, which contribute to more than a quarter of global oil consumption, continue to report the biggest number of daily new cases. Meanwhile, Japan, the world’s fourth-biggest oil consumer, faces a surge in infections that sparked fears on reimposed lockdowns.
Mobility data from Google showed activity slowed down in retail, workplaces, and recreational sites. According to the data, US economic mobility dipped to 25% below pre-pandemic levels in June. Mobility also slumped in Japan following the recent surge in infections. In Europe, Berlin’s traffic congestion has partially recovered. However, congestion in Paris and Rome fell to the lowest since early June, while in Madrid, congestion fell back to mid-June levels.
Lower traffic and mobility data suggest that demand for transportation fuels will likely continue to be under pressure. As a result, Goldman Sachs sees global demand at 96.3 million bpd by the year-end, 6% lower than its pre-pandemic forecast. A Norway-based oil consultancy firm also said oil demand would recover at a much slower rate than previously estimated, saying the demand would still be below the 2019 levels until the end of 2022. Other oil analysts also trimmed their oil demand projection, saying there is a bigger potential for a new supply glut.
