Tag: Pandemic

Post-COVID Global Oil Demand Update – EOY 2020 & the Impact of Second-Wave Shutdowns

Data shows world crude oil demand in the first quarter of 2020 declined by the largest volume in history – even exceeding declines during the 2009 financial crisis. As economic recovery resumes, the demand for hydrocarbons will begin to rise and will quickly surpass pre-pandemic levels. While the timeline has been delayed as a result of a second wave of lockdowns and sustained travel restrictions, people around the world will still need plastics for their daily activities, roads and vehicles to travel from place to place, goods and services created and shipped with hydrocarbons, and other consumables derived from crude oil. While initial recovery estimates by RARE PETRO, the IEA, and EIA have changed, hydrocarbon demand will still eventually recover to pre-pandemic levels for several reasons.

Does The World Really Want High Oil Prices?

With global economies opening back up with the release of a vaccine for the global pandemic, global oil demand is returning and with it, higher oil prices. Unfortunately for consumers, higher oil prices mean higher prices at the pump in addition to increased costs of many manufactured goods. Since hydrocarbons are wound deep into nearly every facet of our society, price changes are inevitably felt in many sectors of the economy. As oil prices rise, associated production costs will be passed through to consumers rather than kept at the bottom line of operators or refineries. When oil prices rise in the near term, it will be better for investors and the remaining companies in the industry at the expense of people consuming the final products produced.

Opinion Piece: How Will OPEC+ Respond?

There is no denying global oil demand is on the rebound, and unfortunately it may be slowed by a new round of lockdowns gripping the United States and Europe from a second wave of the global pandemic. Even though many countries in the OPEC+ group rely on oil revenues to support their national economies, RARE PETRO anticipates they will most likely continue overall production cuts instead of boosting output in January. Regardless of whether or not the current production cuts of 7.7 MMBPD are extended, any move by OPEC+ to keep cuts above 5.8 MMBPD beyond January should be received favorably by the market and may give oil prices additional upward momentum.

Setbacks in Solar Energy from COVID-19

The extraordinary growth in solar energy has been stopped in its tracks as a result of the global pandemic. Many new projects that would have made 2020 the largest growth year for the sector to date have been put on hold for the foreseeable future. Luckily, the stalled growth of the solar sector is just that – projects have simply been put on hold. As the world transitions to a new post-pandemic society, growth in solar power generation will resume its upward trajectory. While two decades of growth in the solar energy sector has been stunted by the coronavirus pandemic, the outlook for the future remains positive.

Did the Federal Bailout Simply Delay The Inevitable for Oil and Gas Companies?

At the end of March during the peak of the pandemic, the Federal Reserve was authorized to buy tens of billions of dollars in corporate bonds from the energy industry. These actions, paired with those taken by the Federal Government to save the oil and gas industry, were met with harsh criticism because the industry was struggling long before the global pandemic and seemed to simply be delaying the inevitable.

Post-COVID Global Oil Demand Series – Part 2: Freight Transport

The coronavirus pandemic has ushered in a new age and as the world begins to adjust to the new normal, demand for commodities like oil and natural gas has and will continue to change. Due to lockdown orders and social distancing guidelines, many individuals altered their in person shopping habits to online ordering. As a result, the freight industry has been able to remain busy during the pandemic ensuring goods reach their final destination in a timely manner. This demand does not appear to be going away anytime soon. Part two of our four part series on post-COVID oil demand will investigate the change in global oil demand for fuel used in freight transportation.

Post-Crisis Recovery: Oil Supply and Demand is Moving Back Towards Equilibrium with China Leading the Way

The dual black swan events of 2020 have thrown supply and demand far out of equilibrium but with China purchasing crude again and various parts of the United States starting to open back up, global oil demand is beginning to return. As the world begins to recover to pre-pandemic levels, market forces will support the shift back towards equilibrium just like the shift we are currently seeing in China.