It will take three years for global oil demand to recover from Covid to its new normal assuming we have a vaccine or a cure. According to estimates from BoA Global Research, long term oil demand will peak at 105 million barrel/day by 2030 on electric car proliferation, and then decline to 95 mn bd by 2050. If heavy vehicles also switch to alternative fuel, electric or more likely hydrogen, demand could drop to 76 mnb/d by 2050.
Transportation has been severely impacted by the implementation of widespread travel restrictions. These restrictions have resulted in a 30 pct drop in global air traffic and an around 40% decline in road traffic. Firms that survive the “high oil saturation” could benefit once demand recovers and supply has been reduced.
Nitesh Shah (Wisdom Tree) | With the coronavirus spreading around the world, the market is understandably scared that demand for crude oil will fall hard this year. Brent oil prices have fallen from a peak of US$68/barrel in the first week of January to US$56/barrel currently (24/02/2020). We believe that the backwardation in the Brent oil futures curve is generated by the fact that OPEC is ready to intervene.
Global oil demand in 2015 is set to grow at the fastest pace in 5 years, underpinned by the economic recovery and low oil prices.