Analysts race to lower outlooks for oil demand

London - 'Demand destruction this year depends on how many countries follow an Italian-style lockdown'

Traders and analysts are struggling to revise down their forecasts for oil demand fast enough, as government lockdowns to contain the coronavirus outbreak have rapidly cut fuel consumption.
At the start of the year, forecasters had expected demand to edge up or stay flat. But, in the space of a few months or even weeks, the most bearish outlooks seem hopelessly out of date.
"Demand destruction this year depends on how many countries follow an Italian-style lockdown," said Giovanni Serio, head of research at Vitol, the world's biggest oil trader. "If you extrapolate to the rest of Europe and particularly the US, then you can get as bearish as you like."
Based on widespread lockdowns in the Europe but more limited US measures, Serio sees demand falling by more than 10 million barrels per day (bpd), which is equivalent to 10% of daily global consumption of crude of about 100 million bpd. IHS Markit and Standard Chartered bank have also predicted demand could drop by as much 10 million bpd by April.
But many analysts are wary of extending predictions for daily demand beyond a few weeks, given the uncertainty about how long the virus will take to contain and the full extent of its economic impact with government policy shifting by the day.
"This is the most dismal oil demand picture we have witnessed in a long time with a simultaneous collapse in jet fuel, gasoline, shipping fuel, petrochemicals, and oil used for power generation," Rystad Energy analyst Louise Dickson said.
Oil prices fell sharply on Friday, putting US crude on track for its biggest weekly percentage decline since 1991.
Brent crude futures were down $1.30, or 4.5 per cent, to $27.16 a barrel by 1548GMT. Brent was on track for a weekly loss of around 20 per cent and its fourth consecutive weekly decline. US crude futures for April fell $2.83, or 11 per cent, to $22.39 a barrel.