Global crude oil inventories could balloon by as much as 1.36bn barrels over the course of 2020 following the collapse of the Opec+ production restrictions. With Opec’s core Gulf producers threatening to unleash some 4mn b/d of spare capacity from 1 April, they risk undoing the successful drawdown of inventories that has taken place since 2017.
The IEA and Opec released their monthly oil market reports this week, with both making sharp downgrades to demand growth expectations in light of the escalating Covid-19 pandemic (see tables). The IEA now sees demand contracting by 90,000 b/d this year in its base case scenario – down from last month’s projected 830,000 b/d increase (MEES, 14 February). Meanwhile, Opec still projects demand growth, albeit just 60,000 b/d. The last annual contraction in global demand was in 2009 during the financial crisis. (CONTINUED - 756 WORDS)