Oil Industry Faces Demand Crash In April
The oil is an all time low this month and this unparalleled demand destruction could transform the industry for years to come. The energy analysts anticipate that daily consumption of oil will plummet by 15 million to 22 million barrels in April in comparison to the demand last year.
Demand destruction in oil sector
In a March note, Goldman Sachs Group Inc. said that shutting down the demand would have large scale and persistent ramifications to supply. Goldman anticipates a surge of 20 billion barrels a day in storage tanks in April. And HIS Markit predicts that the world will run out of storage space for oil in middle of the year.
April is predicted to be the worst ever month for global demand for jet fuel. According to industry consultant FGE forecasts American, the gasoline consumption could plunge by 50% in comparison to the last year. And Energy Aspects Ltd. predicts the global benchmark Brent crude to drop by $10 a barrel, a level not seen in more than two decades.
Aftereffects of April crash in oil
The April crash will be start of a second bleak quarter for the industry and the experts fear that it could send some producers to go to the extent of destabilizing governments in many OPEC countries. But there is a positive side of the crash in oil demand. It will help achieve the energy restructuring so badly needed according to Goldman.