India Fuel Demand Fell 45.8% in April
May 12, 2020
There are several members of OPEC that are making voluntary additional production cuts to try and remove the glut of oil in the market and support prices. A Saudi Arabian energy ministry official said that the ministry has directed Saudi Aramco to cut its crude oil production for June by an extra voluntary amount of 1 million bpd, in addition to the reduction already committed by the kingdom under the OPEC+ cut deal. Kuwait joined Saudi Arabia on Monday in announcing fresh oil production cuts to be implemented in June. Kuwait will cut production by 80,000 bpd in June, in addition to cuts already agreed under a pact by OPEC+. UAE Energy Minister, Suhail Mohamed Faraj Al Mazrouei, said the country is committed to undertaking an additional voluntary oil output cut of 100,000 bpd in June.
The senior oil analyst at Rystad Energy said the additional 1.2 million bpd cuts by OPEC members will not rebalance the market but will remove the strain from the world oil storage close to full capacity.
The above news is supportive to prices, but it is battling against concerns for a second wave of the virus as states open back up which could ultimately have more demand destruction. Goldman Sachs stated that investor feedback suggests that there is still meaningful investor concern that demand will remain week in 2021 with concerns of a second wave of COVID-19 and more modest increases in personal/corporate travel. It said the increase in oil prices is adding concern that we may be sacrificing upside to oil price in the future for price level now that would result in a sooner than desired reversal of existing well production shut-ins.
A survey by the Louisiana Oil & Gas Association showed: Members have reduced 23% of their workforce, 77.5% have begun shut-in production, and 51.35% said bankruptcy is likely.
India’s fuel demand fell by 45.8% in April from a year earlier, as a nationwide lockdown and travel curbs to combat the spread of novel coronavirus eroded economic activity. India’s consumption of fuel, a proxy for oil demand, totaled 9.93 million tons, the lowest level since 2007.