The Organization of the Petroleum Exporting Countries (OPEC) in its July Monthly Oil Market Report (MOMR) said oil demand in OECD Americas dropped drastically by around 6.2 million bpd year-on-year in April, dragged by a massive reduction in road traffic and air travel in the US. For the whole of 2020, the region’s oil demand is expected to fall by 2.3 million bpd from 2019 to 23.30 million bpd, though in 2021 consumption is projected to rise by 1.8 million bpd to 25.14 million bpd.
In April, US oil demand was down by approximately 5.4 million bpd from a year earlier. The decline in April was mostly caused by the impact of the COVID-19 pandemic, which forced economic activity to halt. Preliminary weekly data for May suggested demand to continue to decrease with gasoline and jet fuel dropping by over 3.3 million bpd year-on-year cumulatively. Meanwhile, diesel is projected to perform poorly and decline by around 0.7 million bpd year-on-year.
Mexican oil demand was also sluggish in May, declining by approximately 0.5 million bpd year-on-year. Volume-wise, the decline is similar to that of April. In Canada, oil demand also fell in April from March as users consumed less gasoline, jet kerosene, and diesel.
The COVID-19 epidemic is expected to determine the outlook for US oil demand in the remaining half of the year. Some states have reinstated lockdown measures following the latest deteriorating developments in additional COVID-19 cases, which pose further downside risks for 2020 oil demand growth in the country.
In 2021, oil demand in OECD Americas will unlikely to regain its pre-pandemic levels, even if the health crisis is well-contained and no new major outbreak occurs. OPEC estimated gasoline and diesel to lead demand growth next year, followed by light distillates.
